Aussie capital gains

Question from michael updated on 15th October 2018:

I am selling a property in Australia and will have to pay capital gains. The property has always had losses. Can these losses offset the capital gain? I know if you work in Australia and are paying taxes you are not able to offset the rental loss against the capital gain.

Our expert Matthew Gilligan responded:

This is a question best asked of an Australian accountant. However, my understanding is that if you have losses carried forward that you have been unable to utilise to date, then they are able to be offset against the capital gain. My understanding is that the capital gains in Australia are treated as general taxable income and to the best of my knowledge there is no ring-fencing that says you cannot offset prior rental losses against the capital gains. That said, it is not an issue that I have looked at in recent times, so again I would encourage you to get advice in Australia and presume you have an accountant there who has been filing returns in relation to the property to allow you to accumulate the tax losses in the first place.

Matthew heads GRA's specialist property and asset planning division. He helps clients create optimal tax structures and build wealth through property. He has an extensive buy-to-hold property portfolio, is currently involved in over a dozen developments, and is author of two books - Property 101 and Tax Structures 101.

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