When you are a property investor you will have to pay out when you sell no doubt about it and there is now way out of it either.
Presuming that your investment has gone well, you have cashed in your win and your minds racing about how you are going to spend your profit – WAIT there is the tax man waiting for you rubbing his hands together there is Capital Gains Tax waiting for you.
Yes, there are ways to minimise it of course but if you legitimately owe the tax there is no way of getting around it.
Capital Gains tax what is it?
In simple terms you have made a net profit on the sale of an investment property or other income producing asset, you are liable to pay (usually shares) 50% of the net profit.
The gross capital gain is the difference between what you bought the place for and the sale price you have just sold for.
You then minus the deductions and all other elements of the base cost, which leaves you with your net capital gain.
(Personally, I think this tax should have been thrown out years ago)
Deductions that you can claim
Normally you can claim all the costs associated with purchasing the property in the first place. Stamp Duty, title searches, settlement fees etc.
Depending on the circumstances you can claim selling fees, advertising etc but not on your own home this is talking about investments only.
If you have done a lot of repairs, repaint, replace broken fittings, new security doors etc. these are considered capital expenses and could be claimed.
Of course, if you bought before September 20, 1985 you won’t have to pay capital gains tax.
If you have improved the property since then you will pay tax on the improvements.
If you do, make a loss on the property then you can carry that forward and put it towards another capital win that you will have to pay tax on.
Make no mistake there is no way of getting out of paying capital gains tax no matter what anyone says so don’t try it. Until they change the law (which they won’t) it’s there for us all to bear.