As a homeowner, property taxes are one of the expenses that come with owning a home. Property taxes are levied by the government on the assessed value of a property, and they help fund local services such as schools, fire departments, and police departments. In this guide, we’ll explain how property taxes work in South Australia and provide tips on how you can lower your tax bill.
How Councils Rate are Calculated (Property Taxes).
Council Rates are calculated based on the value of your property. The local government assesses your property’s value, and then a tax rate is applied to that value to determine your council rates. The assessed value of your property is usually based on the fair market value of the property, taking into account the land and any buildings on it. It’s important to note that property tax rates can vary between different councils.
Capital Gains Tax in South Australia
Capital Gains Tax (CGT) is a tax on the profit you make when you sell an asset that has increased in value. In South Australia, CGT is levied on the sale of properties that are not your primary residence. This means that if you sell an investment property, you may be subject to CGT.
The rate of CGT varies depending on your income and the length of time you have owned the property. For individuals, CGT is generally calculated at your marginal tax rate. However, if you’ve owned the property for more than 12 months, you may be eligible for a CGT discount of 50%.
How to Decrease Capital Gains Tax
There are several strategies you can use to decrease your CGT bill:
Keep Accurate Records:
Keeping accurate records of all expenses related to your property, such as renovations and improvements, can help reduce your CGT bill. You can deduct these expenses from the sale price of the property, which will reduce the amount of capital gain.
Use the CGT Discount
If you’ve owned the property for more than 12 months, you may be eligible for a CGT discount of 50%. This means that you’ll only pay tax on 50% of the capital gain.
Consider a Self-Managed Super Fund (SMSF)
A SMSF is a tax-effective way to invest in property. Any capital gains made on the sale of the property will be taxed at a concessional rate of 10%.
Seek Professional Advice
It’s always a good idea to seek professional advice from a tax expert or accountant. They can provide guidance on how to structure your property investments to minimise your CGT liability.
In conclusion, property taxes and CGT can be significant expenses for homeowners. However, by understanding how they work and implementing strategies to reduce them, you can save money and maximise your investment returns. Always seek professional advice before making any significant financial decisions.
