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I am a individual tax payer,I have sold 2 rental properties…

Customer Question

I am a individual tax...

I am a individual tax payer,I have sold 2 rental properties in November 2010, one i lived in for 10 years and rented it out for 2-years the other one was rented out for 25-years and purchased another rental property on the same day. I have to pay CGT to the ATO on one of the rental properties.

My questions are am i exempt from CGT because i purchased another rental property?

IS there any way CGT can be avoided i paying?

Can i wait three years before i decalre my Capital Gains Tax to the ATO?

Submitted: 11 years ago.Category: Australia Law

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11/30/2011

Solicitor: Leon, Solicitor replied 11 years ago

Leon, Solicitor

Category: Australia Law

Satisfied Customers: 52,712

Experience: BEc Dip Ed, Dip Law (SAB) MTax (UNSW)

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Good Evening

You sold the rental property that you had for 25 years and bought another rental property?

When in 1985 did you purchase the 25 year rental property?

Customer reply replied 11 years ago

No i bought it on the 25th February 1989

Solicitor: Leon, Solicitor replied 11 years ago

Good Evening

If you rented it out for 25 years and sold it in 2010 you started renting in 1985

1985 is a key year for CGT.

Can you confirm the dates please.

Customer reply replied 11 years ago

Sorry Leon,

I bought the property on the 25th February 1989 and started renting it out from March 1989.

Solicitor: Leon, Solicitor replied 11 years ago

Good Evening

On the one you sold (the long term rental) you will have to pay CGT on 50% of the profit.

There is no roll over allowed.

You do not qualify for the small businese rollover.

Here is some information on this

http://www.ato.gov.au/content/00106318.htm

The CGT will have to be paid.

The other property you can claim the principal residence exemption.

I hope this is of assistance and if so please click on the accept button.

Customer reply replied 11 years ago

How long can i wait before declaring to the ATO my Capital Gains Tax? can i defer it for 2 or 3 Financial Years?

WIll the ATO let me pay $55,000 one year and $20,000 12 Months later?

Solicitor: Leon, Solicitor replied 11 years ago

Good Afternoon

You have to declare it in the year you make it.

You cannot defer it.

It is not a small business and you cannot delay it.

No they will want it all at once.

How much was the total net profit and what is your top tax bracket?

Customer reply replied 11 years ago

Total net profit was $187,000 but they then at that income to my work annual income which amounts to $223,000 taxable income for that financial year and it works out i have to pay approx $75,000 in CGT, i don't know my tax bracket m, i thing a certain amount first $50,000 i get charged 32.5%, then it goes up to 39% and so on, so the ATO will not let you pay that in instalments?

This will increase my Child Support Payments dramatically, because i am also paying court costs to get access to my daughter, does CSA let you pay that in intstallments as well ? The total i have to pay CSA is $18,000 and i only earn $40,000 per year threough work and i have a loan to pay off.

Solicitor: Leon, Solicitor replied 11 years ago

Good Evening

Yes you would pay 47% on the 50% of the Capital gain and if you dont have deductions it will be huge.

You should speak to your accountant about deductions you have to minimise the tax.

CSA will let you pay it off if you need to.

I hope this is of assistance and if so please click on the accept button.

Leon, Solicitor

Category: Australia Law

Satisfied Customers: 52,712

Experience: BEc Dip Ed, Dip Law (SAB) MTax (UNSW)

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