Property tax and CGT estimates

Cash follows money received and paid. Taxable income follows how the tax rules treat it. They differ in three places.

• Loan principal costs cash but is never deductible. Interest is deductible where the loan's use makes it claimable.
• Division 43 Division 43 The yearly deduction for the cost of the building, called capital works. and Division 40 Division 40 The yearly deduction for the fall in value of fittings such as appliances, called plant and equipment. lower taxable income without costing cash.
• An operating cost counts as its Tax treatment says: Fully deductible, Deductible for the income-producing share, or Not deductible.

Emma's Frankston unit shows both sides. On its Property outlook, the 2026-27 row of Tax and final cash has a Taxable rental contribution of -$17,910. That is a rental loss.

The same year needs $9,110 of cash before tax. The loss lowers Emma's tax and HELP from $49,205 without the unit to $42,779 with it.

So a property can cost cash each month and still lower its owner's tax. The Armadale house runs the other way. It adds $2,085 to Daniel's taxable income in 2026-27 and $980 to his tax.

Open the property and select Edit property. Two panels hold the tax records. How do I add a property? covers the other panels.

• Sale assumptions: Expected selling cost, the agent, legal and marketing costs as a share of the price, then Main residence on sale and Projected annual CPI. Section 7 explains the last two.
• Tax and depreciation records: Special tax rules, Purchase and improvement costs and the Depreciation schedule.

Purchase and improvement costs make up the cost base with the acquisition cost. Each cost has a Category, an Amount and an Incurred on date.

• Purchase costs, such as stamp duty and legal fees.
• Non-deductible ownership costs, which count only when you could not claim them, such as rates while you lived there.
• Capital improvement.
• Title and ownership costs.

Tick Every purchase and improvement cost is listed once the list is whole, or when there are none. Until then the tax on a sale is unavailable, and the property's Acquisition panel reads Cost base evidence Incomplete. The Frankston unit has one cost, Purchase costs of $28,600.

Each owner's tax settings and carried balances are read too, such as other taxable income and carried losses.

The Depreciation schedule has three parts.

• Opening Division 43 history: Building deductions claimed, every Division 43 deduction claimed or that could have been, and Claimed up to financial year, the last year that total covers. For a property bought before 1 July 2027, use 2026-27 or earlier. Tick The Division 43 history through the opening financial year is complete once the total covers every year.
• Depreciation periods: each has Starts in financial year, Ends in financial year, Annual Division 43 and Annual Division 40. Add a new period each time an amount changes. Both the start and end years are included.
• Confirmed depreciation expiry financial year: leave it empty unless the schedule's final year is confirmed.

The Armadale house has Division 43 of $4,500 a year from 2021-22 to 2035-36 and Division 40 of $0. Fittings already in a home bought from an earlier owner after 9 May 2017 cannot be claimed, unless a company owns it. Its page shows Division 43 claimed to date, $9,000 through 2020-21.

Division 43 claimed lowers the cost base on a sale. Division 40 changes yearly taxable rental income only. A year after the last period has no estimate until a period covers it, or the expiry year shows the deductions have ended. Depreciation ends after, on the property's page, shows that year, or Not confirmed.

Special tax rules has two choices. Leave each at No special rule unless your records or a tax adviser confirm one applies.

• Special rental-loss rule. From 1 July 2027, a loss on a home rented out and bought after 7:30pm AEST on 12 May 2026 can only reduce rental income, not other income such as wages. The rest is held as a Residential rental loss for later years. The choices Qualifying new dwelling, Designated housing, Employer-provided accommodation and Not a residential dwelling each lift that limit.
• Special capital gains tax (CGT) rule: New dwelling or Affordable housing. Sales from 1 July 2027 use new capital gains rules, which treat these differently.

A property bought before 12 May 2026, such as each of the Mitchells', keeps the old rental loss treatment. Its loss still lowers other income.

A company, trust or fund has Rentals add to tax or Rentals lower tax by. The fund's rentals add $1,910 to its tax.

Allocated tax shares the household's tax change between the properties. Each property's own part is the change when it alone is taken out. A plus is tax saved. The Frankston unit lowers Emma's tax, so it shows +$3,573. How is performance measured? explains the rest of that page.

The contract date sets the financial year the gain is taxed in. The settlement date is when the sale cash arrives and the property's ownership, use, rent and expenses end.

A contract signed on 24 June 2027 is taxed in 2026-27, and settles after 30 June 2027. One signed on 8 July 2027 is taxed in 2027-28. Sale analysis on the property's page estimates a sale today at the value. A recorded sale uses the dates on the contract and the settlement statement. Selling an investment property before retirement follows a sale from the price to the cash left.

The gain is the sale price less selling costs and the cost base Cost base What the property cost for tax: the acquisition cost and the purchase and improvement costs, less the Division 43 claimed to date. , split between the legal owners by their shares on the contract date. The estimated tax is each owner's tax with the sale less their tax without it. It is never a separate charge on top.

The Armadale house's Sale analysis shows Estimated tax of -$83,772. Its working lists the Acquisition cost of $329,000, the Recorded value of $665,000 and Selling costs of $16,625. The page does not show the gain or the cost base.

A trust's gain is taxed in its beneficiaries' hands. The Elizabeth house belongs to the Mitchell Family Trust, with Daniel and Emma each taking half.

The $69,668 is Daniel's $39,766 and Emma's $29,901, each marked Pays tax on the trust's gain as a beneficiary. The gain raises Emma's income for the year, so she also repays $6,148 more HELP. By legal owner shows the trust keeps $383,478, With the company or trust, while Daniel and Emma pay the tax from their own cash.

Sale assumptions sets three things the estimate needs.

• Main residence on sale: Full main-residence exemption, Partial main-residence exemption, No main-residence exemption or Not sure. Not sure leaves the tax on a sale unavailable. For a company, trust or fund the form says Companies, trusts and SMSFs cannot use the main residence exemption.
• Partial main-residence exemption adds Cost base to use: Original acquisition cost base, or First income-use market value (section 118-192). The second applies when the whole property was your home until it was first rented. The cost base then starts at its market value that day. The estimate uses your dated home and rental use and the area each used.
• Projected annual CPI change, the yearly rise in prices that indexation uses for a sale from 1 July 2027.

From 1 July 2027, cost base indexation and a 30% minimum tax replace the 50% discount for a person or trust. The gain up to then keeps the old rules. A property with the New dwelling rule adds New-dwelling election from 1 July 2027: CGT discount or Cost-base indexation. Without a choice, the tax on that sale is unavailable. Cost base indexation and the 30% minimum tax explains both.

A person's tax is estimated only for a full-year Australian resident. It counts the tax offsets that apply, the Medicare levy and compulsory HELP. It leaves out the Medicare levy surcharge, family thresholds and exemptions from the levy. A company, trust or fund is taxed by its own settings.

Each working shows the steps, such as Emma's taxable income and the bracket it falls in. What is the annual tax settlement? works through hers. These are planning estimates, not tax advice.

A result that needs a missing tax record names it, with an action that opens the record.

Until then, the figure that needs the record reads Unavailable. A year with no tax settings says This year has no tax settings, so it shows cash without tax. Setup lists every record a result is waiting on.