Property Capital Gains Tax Calculator
Understanding Capital Gains Tax (CGT) on Property
Capital Gains Tax (CGT) is the tax you pay on the profit made from selling an asset, such as real estate. In most jurisdictions, your "capital gain" is the difference between what it cost you to acquire and improve the property and what you received when you sold it.
How to Calculate Your Property Capital Gain
To find your net capital gain, you must determine your Cost Base. The cost base includes:
- Original purchase price of the property.
- Incidental costs of acquisition (stamp duty, legal fees, inspections).
- Costs of capital improvements (renovations, extensions, or landscaping).
- Costs associated with selling the property (real estate agent commissions, marketing, and legal fees).
The Formula:
Selling Price – (Purchase Price + Improvements + Selling Costs) = Capital Gain/Loss
Important Considerations
1. Primary Residence Exemption: In many countries, you do not pay CGT on the sale of your main home (primary place of residence). This calculator is intended for investment properties or secondary residences.
2. Holding Period: Some regions offer a CGT discount (often 50%) if you have held the property for more than 12 months. Please consult a tax professional to see if you qualify for discounts based on your specific location and duration of ownership.
3. Capital Losses: If you sell a property for less than its cost base, you have a capital loss. Capital losses can usually be used to offset capital gains made in the same or future financial years.
Example Calculation
If you bought a rental property for $500,000, spent $30,000 on a new kitchen, and sold it for $700,000 while paying $20,000 in agent fees, your gain would be:
$700,000 – ($500,000 + $30,000 + $20,000) = $150,000 Capital Gain.
If your marginal tax rate is 30%, your estimated tax without any discounts would be $45,000.