CGT and Brisbane Commercial Property

If you’re an owner of Brisbane commercial property it’s important to know that the following can trigger a capital gains tax (CGT) liability:

1 – Disposal of Brisbane commercial property

Owners and investors with Brisbane commercial property will likely encounter CGT upon disposal of the property.  Disposal of the property means to sell it. Once sold, the CGT to pay will be calculated on the difference between the amount they paid for the property and the amount they sell it for.

2 – Loss or Destruction of Brisbane commercial property

If a commercial property is lost or destroyed by an event like a fire or a flood.

3 – Gifting Brisbane commercial property

If an owner chooses to gift their property to someone else.

4 – Deemed Disposal of Brisbane commercial property

A “deemed disposal” occurs when the owner of the property ceases to be an Australian resident.

 

brisbane commercial property

 

How to prepare for a CGT liability?
  • Built potential tax liabilities into your budget/forecast if you’re looking to acquire commercial property
  • Keep good records – particularly any transactions that can impact the CGT calculation
  • Prepare to pay part of any profit in CGT
  • The liability will change depending on whether the property was bought by an individual, trust, superannuation fund, or company
A very brief snapshot of what CGT is and how it relates to Brisbane commercial property –
  • The capital gain is worked out by taking the gross sale proceeds and deducting the cost base (e.g. purchase price plus any incidental costs, costs of ownership, improvement costs, and title costs).
  • If the cost base is less than the sale proceeds, the difference is a capital gain.
  • If the cost base is more than the sale proceeds, the difference is a capital loss.
  • A capital loss can be offset against capital gains incurred in the same year, or it can be rolled forward to offset against capital gains of future years.
  • Capital losses can only be offset against capital gains.
  • CGT is essentially part of income tax liability.
  • If the property has been held for more than 12 months, the capital gain can be discounted by – 50% for individuals and trusts, 33.333% for certain superannuation funds, but 0% for a company.
Remember, a capital gain may occur if any of the below take place –
  1. Disposal of the property;
  2. Loss or destruction of the property;
  3. Gifting the property to someone else; or
  4. A “deemed disposal”.

 

brisbane commercial property

 

This is a very simple article on a very complex topic. The information contained in the article is only a very basic overview. For further information, details, or advice please consult an experienced financial adviser or tax professional.

The ATO has some helpful online resources here:

Guide to capital gains tax 2018

CGT – Your home and other real estate

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CGT and Brisbane Commercial Property