Case Study: Capital Gain Tax Reduced to Zero

November 12, 2009

Client Problem
Our client sold an investment property and made a Capital Gain in excess of $1.6M. They approached Gotsis Accounting to determine if there were any provisions in the tax laws that they could take advantage of to reduce their tax liability to Capital Gain.

Tax Effective Recommendations

Following our detailed examination of the history of the property sold, its usage during the years it was owned by them, and other relevant factors, our client could not believe their luck when we presented them with the results that they could reduce their Capital Gains Tax to zero.

Firstly our clients, being individuals and having held the property for more than 12 months were entitled to a 50% concession on the Capital Gain.

Secondly, there was another 50% concession on the balance as our clients met the “active asset” test.

Finally, our clients had no tax liability, whatsoever, on the Capital Gain as they were entitled to take advantage of the “used for retirement” provision.

Real Tax Benefits
So, out of a Capital Gain of more that $1.6Mno tax was payable by our clients. The surprising thing to our clients about this result was, as they said, there were no complex arrangements, no tax schemes, etc. Simply with the appropriate tax advice given by Sydney property investment accountant Gotsis Accounting, they took advantage of the tax law provisions and the Small Business Concessions.