How to Calculate Capital Gains Tax on Rental Property

You didn’t quote the 2017 pension figure, but inflation has risen 9.575pc since then, so we can estimate your pension then was ($1,300 x [100 – 9.575] =) $1175.50 per fortnight. (Hope you weren’t too careless rounding your pension up or down.) This means the special value is ($1175.50/14 x 365 x 16) = $490,350 in round numbers.

To find your TSB, you need the value of your accumulation funds as of June 30, 2021. You haven’t provided them all either, but, using the numbers you quoted, we can estimate a total TSB of $1,613,350.

So, since your TSB is between $1.59 million and $1.7 million, you should be able to contribute up to $110,000 this fiscal year as a nonconcessional contribution.

As a married couple, I don’t see how your spouse could qualify for a partial age pension, given the numbers you quoted, because you’re well over the $1.108 million threshold for a non-homeowner couple .

Before you do anything, get more specific numbers from your accountant.

Could you help me navigate through the minefield of capital gains tax (CGT) on inherited property? Our parents bought their house in 1967. Dad died in 2006 and his half title passed to our mother, with the property being her main residence until 2015 when it had to be placed in a retirement home . In 2017 she passed away and the property was transferred to my name, as executor for my brother and I, to equally share the proceeds of any sale. After an unsuccessful attempt to sell within the two year deadline, we finally sold the property in 2021. We jointly spent about $65,000 to get a marketable product and make the sale. My brother, who took care of our mother until 2015, continued to live in the property until then. At the time of mom’s death, the property was worth $800,000 and sold for $960,000. I have capital losses of about $20,000, which I carried forward. Do I need an assessment from 2006 and how can I reduce the CGT to pay? RR

Your mother inherited from her husband while living in the house and thus the whole house would be considered her principal residence, exempt from CGT.

When she moved into an aged care facility, she could still claim it as her primary residence for up to six years.

Incidentally, the average length of stay in a nursing home is around 30 months, according to the recent Royal Commission on the Care of the Aged.

I understand that your brother was a beneficiary of your mother’s will and treated the house as his primary residence until it was sold. If I understood correctly, the CGT exemption should have continued as long as he lived there until the sale.

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However, there may be many other aspects of the case that you haven’t mentioned, and you really should discuss them with a tax accountant.

The advice given in this article is of a general nature and is not intended to influence readers’ decisions regarding investments or financial products. Before making financial decisions, they should always seek their own professional advice that takes into account their personal circumstances.

If you have a question for George Cochrane, send it to Personal Investment, PO Box 3001, Tamarama, NSW, 2026. Helplines: Australian Financial Complaints Authority, 1800 931 678; Centrelink pensions 13 23 00.

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