Work out the capital gains tax on a property or share sale in Australia. Put in what you sold it for, what it cost you and what else you earn, and it tells you the tax, the 50 per cent discount if you qualify, and what you keep. Nothing is saved and there is no sign-up.
Selling one property to buy the next?
The tax bill decides what deposit you are actually left with. A broker can tell you what that buys you before you sign anything, and whether keeping the place and borrowing against it works out better.
How capital gains tax works in Australia
There is no separate capital gains tax. The gain is added to your income for the year and taxed at your normal rates, plus the 2 per cent Medicare levy. That is why the same gain costs one person 21 per cent and another 47 per cent. It depends entirely on what else you earned that year.
It also means the year you sell matters. A gain landing in a year you went part time, or had a quiet year in the business, costs far less tax than the same gain in a big year.
The 50 per cent discount and the 12 month rule
If you owned the asset for more than 12 months, only half the gain is taxed. On a $261,000 gain that is the difference between roughly $116,000 of tax and roughly $55,000.
The 12 months is counted from the day after you bought it to the day before the CGT event, so a sale at eleven months and three weeks gets nothing. If you are close to the line, that is worth knowing before you sign anything.
What counts as your cost base
Most people only count the purchase price, and they overpay as a result. The cost base also takes in stamp duty, conveyancing and legal fees both ends, the agent’s commission, marketing and styling costs, building and pest inspections, and any money you spent improving the place.
Improving is not the same as repairing. A new kitchen counts. Fixing the one that was there does not, because that is a repair you claim as a deduction instead.
There is a fourth group most people miss: rates, land tax, insurance and loan interest while you owned it, but only where you have not already claimed them as deductions. For a property that was never rented out, that can be a large number. Ask your accountant, because it is the single most overlooked part of the sum.
Your own home is usually exempt
If a property was your main residence for the whole time you owned it, and you did not rent out any part of it or run a business from it, there is no capital gains tax when you sell.
The word doing the work is “whole”. Rent it out for two years in the middle and part of the gain becomes taxable. There is a rule that lets you keep treating it as your home for up to six years after you move out, if you are renting it out, and indefinitely if you are not. Whether you can use it depends on what other property you own and where you were living. That one is an accountant question, not a calculator question.
The date that catches people out
The gain belongs to the year you signed the contract, not the year it settled. Sign on 25 June and settle in August and the tax lands in the earlier financial year, even though the money arrives in the later one.
That catches people every winter. If you are selling in May or June and the timing suits you either way, it is worth asking which side of 30 June you want the contract dated.
Capital losses
Losses come off your gains before the 50 per cent discount, not after. Doing it the other way round costs you money.
A capital loss cannot reduce the tax on your wages. It only offsets capital gains, and it carries forward with no time limit until a gain uses it up. If you are sitting on shares that have gone nowhere and you are about to sell a property at a profit, the order and timing of those two decisions is worth a conversation.
What this calculator does not cover
It assumes an Australian resident individual selling one asset. It does not handle foreign or temporary residents, who lost the discount on assets acquired after 8 May 2012, property owned through a company or trust, small business concessions, assets bought before 20 September 1985, or a property that was your home for part of the time only.
It also uses your taxable income as you enter it, so put in the figure after your deductions, not your gross salary.
This is general information, not tax advice. Take the number to your accountant before you act on it.
Questions people ask
How much capital gains tax will I pay on an investment property?
It depends on your income, not on the property. Add half the gain to your taxable income if you held it over 12 months, then look at the tax on that. The calculator above does the sum for you.
Can I avoid capital gains tax by putting the money into another property?
No. Australia has no rule that lets you roll a gain into the next purchase. That is an American rule that gets repeated here and it is not true.
Do I pay capital gains tax if I inherit a property?
Not when you inherit it. There may be tax when you sell it, and how it is worked out depends on when the person bought it and what it was used for. This is one to take to an accountant.
What if I sold at a loss?
There is no tax, and the loss carries forward to reduce the tax on your next capital gain. It does not reduce the tax on your wages.
Related calculators
- Investment property calculator — the whole hold, week by week and year by year, before you ever get to the sale.
- Negative gearing calculator — what the property costs you every week while you hold it.
- Offset account calculator — the safest place to park cash against an investment loan.
- Borrowing power calculator — what the money left over after tax will actually buy.
- Income tax calculator — the rates the gain gets taxed at, since it is added to your income.
- Property selling cost calculator — the agent and legal costs that come off the sale price.
What does the money left over actually buy?
Once you know the tax, the next question is what you can borrow. A broker can put a real number on it in one conversation, free.