Investing cash?

[dave289]

Originally Posted by Pis-ton broke

As I understand it , the op. is due to pay capital gains? tax on a property.
And are you saying that ,if its put in to an investment , even a provitable one, for over one year then the capital gains is reduced?

I,m unaware of tax rules on investments. you have many links, do you know of a good one, so as i can learn some of this stuff. as i have just invested some money in woolsworths shares.

cheers mick

If you were referring to your shares mick then the answer is yes , if you were to hold them for over a year ,you will only pay tax on half the profit .

some examples for you : If you bought your woolworths shares for $20 dollars and held them for a year or more and sold them at $30 dollars , this would be the outcome . say you bought $50,000 dollars worth , you sell them 13 months later for$30 ,you know have $75,000 . so $25,000 is considered capiatal gain , if you have held it for over a year the amount you pay capital gains tax on is reduced by half ,so you only pay tax on $12,500 while still holding your $62,500 . if you were to sell out in six months time at $30 you will pay capital gains tax on the whole $25,000 profit.

So if you earn say $75,000 in your job a year , and sell your shares after one year you will pay tax on $87,500 for that financial year . If you held them for only six months but sold them at $30 your taxable income would be $100,000 for the financial year.

Now that is for a capital gain , I will briefly explain capital loses while I am here.

If I bought the shares for $20 like before and they went to $10 dollars and I sold that would be a capital loss . my initail $50,000 investment would now be worth $25,000 ,so I have had a capital loss of $25,000 . Now heres the thing , you cannot offset a capital loss against your wages , meaning you just pay your normal amount of tax on the wage for your job . You can only offset a capital loss with a capital gain , If I had some other shares shares that made a profit and had a capital gain of $25,000 I could offset this against my capital loss and effectively pay no tax on the shares that profited.

Or if you owned an investmant property and sold it for a profit you can offset your capital gain on the property against your capiatl loss from the shares and reduce the amount of tax you pay on the investment. If you have shares and sell them at a loss you can offset this with a any gain you make even years down the track . so I might make a loss one year , but if I sell an investment property or shares seven years later and make a capital gains pofit I can offset this from my loss seven years ago , I dont know exactly what the time frame to use this up is , it may be eternally , but I am not sure about that , you will have too look into that yourself.