Booming property prices during the pandemic has meant some sellers will be slugged with unexpectedly large tax bills. | OPINION Ask an expert with George Cochrane
I assume you never lived in the house and hence none of the profit was exempt from CGT. If we take the capital gain as $600,000, you would claim the 50 per cent discount and add $300,000 to your taxable income.
However, the tax is only about 19 per cent of the sale price, and you now have $534,000 in the bank. It’s not a bad situation to be in! “We allow the principal amount of your loan to get up to $30,000 below where the principal balance would be if you made all your regular repayments on time, and made no prepayments, without charging you a prepayment break cost. This $30,000 is your prepayment threshold” says Westpac
Each bank sets different limits on how much in extra repayments a person can make during the fixed rate period and Westpac’s is fairly generous. For example, NAB allows up to $20,000 in extra repayments without incurring “economic costs”; CBA allows $10,000 per fixed-rate year; and ANZ allows the lesser of 5 per cent of the loan or $5000 per year.