If you’re an Australian property investor and you want to know how Capital Gains Tax works, you’ve come to the right place. This post introduces the basic concepts behind capital gains tax in Australia; explains what happens if your investment property was also your main residence for a portion of the time; shows how depreciation fits into the equation; and provides a step-by-step guide to calculating CGT. A spreadsheet is provided to help illustrate the concepts and calculations, and if you like managing your own finances and doing your own tax, then you can edit the spreadsheet yourself to work out your CGT.
So you bought an investment property – good on ya. Now you need to know how depreciation works so you can pay less tax. This post explains how depreciation works in Australia according to the ATO, and will help you to manage your own finances and do your own tax return. A spreadsheet is also provided to help illustrate the concepts and do the sums for you, and you can freely download or copy the spreadsheet and use it to calculate your annual depreciation amounts.