Sarah, an Australian resident, bought an investment property for $500,000 in 2020 and sold it for $650,000 in 2024. If her whole discounted gain is taxed at her 37% marginal rate, how much tax does the gain cost her?
Correct Answer
A) $27,750
The gain is $650,000 − $500,000 = $150,000. Held for over 12 months by a resident individual, it is discounted by 50% to $75,000, which is added to her assessable income. Taxed at 37%, the gain costs her $75,000 × 37% = $27,750 (before the Medicare levy). There is no separate CGT rate; the net gain is taxed as ordinary income.
Why This Is the Correct Answer
The $150,000 gain is halved by the 50% discount to $75,000. At her 37% marginal rate that adds $27,750 to her tax bill.
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