Question

Lucas and his wife Avery bought an apartment in Sydney for $130,000 on 1 September 2003. Lucas and Avery used the apartment as their main residence until Lucas received an offer to work in Melbourne. Lucas and Avery left Sydney for Melbourne on 1 September 2014. The apartment was rented out until the apartment was sold on 1 September 2018 for $555,000 to fund the purchase of a new home in Melbourne for $620,000.

Calculate the Capital Gains Tax (CGT) on the sale of Lucas and Avery’s apartment. Your answer must include references to relevant Tax Law and / or cases.

Answer 1

Answer:

As per the Austrlian tax ,when selling assets ,at that point take the selling cost and take away its unique or original expense and related costs (like lawful fees ,stamp duty ,and so forth). The rest of the sum is our capital gain or loss.

In the event that we have made a capital gain and held an asset for more than 12 months(assuming we don't have other capital losses),we can apply the 50% discount to work out your net capital gain (except if the indexation strategy applies).

Given :

Cost of Acquistion asset/apartment = $ 1,30,000

Sale price of rented apartment = $ 5,55,000

Compute the capital gains tax on the sale of Lucas and Avery's apartment:

Particulars	Amount	Amount
Sale price of rented apartment		$ 5,55,000
Less: Cost of acquistion apartment		$ 1,30,000
Capital Gain	= sale price - cost of acquistion = $ 5,55,000 - $ 1,30,000 = $ 4,25,000	$ 4,25,000
Less: Discount 50 %	= $ 4,25,000*50% = $ 4,25,000*50/100 = $ 2,12,500	$ 2,12,500