Introduction
When selling property in Australia, one of the most important tax considerations is Capital Gains Tax (CGT). Because property transactions often involve large sums of money, CGT can significantly reduce the profit you walk away with.
Understanding how it works, how to calculate it, and what exemptions may apply can help you plan ahead and minimise your liability.
Why CGT Matters for Property Sellers
Even a modest rise in property value can result in a large CGT bill. For example, a $200,000 profit could mean tens of thousands in tax if you don’t structure the sale carefully.
By knowing the rules and available concessions, sellers can take advantage of exemptions or discounts and better manage their after-tax returns.
What Is Capital Gains Tax?
Capital Gains Tax is the tax you pay on the profit made when selling an asset such as property. It is not a separate tax but forms part of your income tax. Your capital gain is calculated as: Capital Gain = Capital Proceeds – Cost Base.
CGT generally applies when you sell a property, with the main exception being your primary residence, which is usually exempt.
When Do You Pay CGT?
A CGT event occurs when you sell a property, transfer ownership such as through gifting or a divorce settlement, or inherit and later sell a property (rules depend on when the original owner acquired it).
CGT is reported and paid in your income tax return for the financial year when the event takes place.
Steps to Calculate CGT on Property
Step 1: Work Out the Cost Base
The cost base usually includes the purchase price, stamp duty, legal fees on purchase and sale, renovation or improvement costs that are structural rather than decorative, and selling costs such as agent commissions and marketing.
Step 2: Work Out the Capital Proceeds
This is typically the total sale price, minus selling costs.
Step 3: Calculate the Capital Gain
Apply the formula: Capital Gain = Capital Proceeds – Cost Base.
Step 4: Apply Discounts (if eligible)
Individuals and trusts may reduce the gain by 50% if the property was owned for more than 12 months. Superannuation funds are eligible for a 33.3% discount. Companies do not receive CGT discounts.
Step 5: Offset Losses
If you have capital losses from other investments, you can use them to reduce your taxable gain.
Exemptions & Concessions
Main Residence Exemption
If the property was your main home for the entire ownership period, you are generally exempt from CGT.
Temporary Absence Rule
If you move out and rent the property, you can still treat it as your main residence for up to six years. If it is not rented, you may continue to claim it indefinitely, provided no other property is nominated as your main residence.
Inheritance Rules
For inherited properties, CGT is usually calculated when you sell. The cost base is generally the property’s market value at the date of the original owner’s death if they acquired it after 20 September 1985.
Small Business Concessions
Business owners may qualify for additional concessions on property used in their business, such as the 15-year exemption, retirement exemption, and rollover provisions. Strict conditions apply.
Example Calculation
Purchase price (cost base): $500,000
Selling price (capital proceeds): $700,000
Capital gain: $200,000
If held for more than 12 months and eligible for the 50% discount: Taxable Gain = $200,000 × 50% = $100,000. This $100,000 is added to your assessable income and taxed at your marginal rate.
Reporting & Record-Keeping
You must report capital gains in your annual tax return. The ATO requires you to keep records for at least five years, including purchase and sale contracts, invoices for improvements and renovations, and legal and agent fees.
Conclusion
Capital Gains Tax is a key factor in property sales across Australia. By carefully calculating your cost base, applying eligible discounts, and checking exemptions such as the main residence rule, you can reduce your tax bill and protect more of your profit.
For complex cases like inheritance or small business concessions, professional advice is strongly recommended. At SearchX, we help sellers and professionals stay compliant with property regulations and ensure all contract obligations are handled correctly.
Introduction
When selling property in Australia, one of the most important tax considerations is Capital Gains Tax (CGT). Because property transactions often involve large sums of money, CGT can significantly reduce the profit you walk away with.
Understanding how it works, how to calculate it, and what exemptions may apply can help you plan ahead and minimise your liability.
Why CGT Matters for Property Sellers
Even a modest rise in property value can result in a large CGT bill. For example, a $200,000 profit could mean tens of thousands in tax if you don’t structure the sale carefully.
By knowing the rules and available concessions, sellers can take advantage of exemptions or discounts and better manage their after-tax returns.
What Is Capital Gains Tax?
Capital Gains Tax is the tax you pay on the profit made when selling an asset such as property. It is not a separate tax but forms part of your income tax. Your capital gain is calculated as: Capital Gain = Capital Proceeds – Cost Base.
CGT generally applies when you sell a property, with the main exception being your primary residence, which is usually exempt.
When Do You Pay CGT?
A CGT event occurs when you sell a property, transfer ownership such as through gifting or a divorce settlement, or inherit and later sell a property (rules depend on when the original owner acquired it).
CGT is reported and paid in your income tax return for the financial year when the event takes place.
Steps to Calculate CGT on Property
Step 1: Work Out the Cost Base
The cost base usually includes the purchase price, stamp duty, legal fees on purchase and sale, renovation or improvement costs that are structural rather than decorative, and selling costs such as agent commissions and marketing.
Step 2: Work Out the Capital Proceeds
This is typically the total sale price, minus selling costs.
Step 3: Calculate the Capital Gain
Apply the formula: Capital Gain = Capital Proceeds – Cost Base.
Step 4: Apply Discounts (if eligible)
Individuals and trusts may reduce the gain by 50% if the property was owned for more than 12 months. Superannuation funds are eligible for a 33.3% discount. Companies do not receive CGT discounts.
Step 5: Offset Losses
If you have capital losses from other investments, you can use them to reduce your taxable gain.
Exemptions & Concessions
Main Residence Exemption
If the property was your main home for the entire ownership period, you are generally exempt from CGT.
Temporary Absence Rule
If you move out and rent the property, you can still treat it as your main residence for up to six years. If it is not rented, you may continue to claim it indefinitely, provided no other property is nominated as your main residence.
Inheritance Rules
For inherited properties, CGT is usually calculated when you sell. The cost base is generally the property’s market value at the date of the original owner’s death if they acquired it after 20 September 1985.
Small Business Concessions
Business owners may qualify for additional concessions on property used in their business, such as the 15-year exemption, retirement exemption, and rollover provisions. Strict conditions apply.
Example Calculation
Purchase price (cost base): $500,000
Selling price (capital proceeds): $700,000
Capital gain: $200,000
If held for more than 12 months and eligible for the 50% discount: Taxable Gain = $200,000 × 50% = $100,000. This $100,000 is added to your assessable income and taxed at your marginal rate.
Reporting & Record-Keeping
You must report capital gains in your annual tax return. The ATO requires you to keep records for at least five years, including purchase and sale contracts, invoices for improvements and renovations, and legal and agent fees.
Conclusion
Capital Gains Tax is a key factor in property sales across Australia. By carefully calculating your cost base, applying eligible discounts, and checking exemptions such as the main residence rule, you can reduce your tax bill and protect more of your profit.
For complex cases like inheritance or small business concessions, professional advice is strongly recommended. At SearchX, we help sellers and professionals stay compliant with property regulations and ensure all contract obligations are handled correctly.
Introduction
When selling property in Australia, one of the most important tax considerations is Capital Gains Tax (CGT). Because property transactions often involve large sums of money, CGT can significantly reduce the profit you walk away with.
Understanding how it works, how to calculate it, and what exemptions may apply can help you plan ahead and minimise your liability.
Why CGT Matters for Property Sellers
Even a modest rise in property value can result in a large CGT bill. For example, a $200,000 profit could mean tens of thousands in tax if you don’t structure the sale carefully.
By knowing the rules and available concessions, sellers can take advantage of exemptions or discounts and better manage their after-tax returns.
What Is Capital Gains Tax?
Capital Gains Tax is the tax you pay on the profit made when selling an asset such as property. It is not a separate tax but forms part of your income tax. Your capital gain is calculated as: Capital Gain = Capital Proceeds – Cost Base.
CGT generally applies when you sell a property, with the main exception being your primary residence, which is usually exempt.
When Do You Pay CGT?
A CGT event occurs when you sell a property, transfer ownership such as through gifting or a divorce settlement, or inherit and later sell a property (rules depend on when the original owner acquired it).
CGT is reported and paid in your income tax return for the financial year when the event takes place.
Steps to Calculate CGT on Property
Step 1: Work Out the Cost Base
The cost base usually includes the purchase price, stamp duty, legal fees on purchase and sale, renovation or improvement costs that are structural rather than decorative, and selling costs such as agent commissions and marketing.
Step 2: Work Out the Capital Proceeds
This is typically the total sale price, minus selling costs.
Step 3: Calculate the Capital Gain
Apply the formula: Capital Gain = Capital Proceeds – Cost Base.
Step 4: Apply Discounts (if eligible)
Individuals and trusts may reduce the gain by 50% if the property was owned for more than 12 months. Superannuation funds are eligible for a 33.3% discount. Companies do not receive CGT discounts.
Step 5: Offset Losses
If you have capital losses from other investments, you can use them to reduce your taxable gain.
Exemptions & Concessions
Main Residence Exemption
If the property was your main home for the entire ownership period, you are generally exempt from CGT.
Temporary Absence Rule
If you move out and rent the property, you can still treat it as your main residence for up to six years. If it is not rented, you may continue to claim it indefinitely, provided no other property is nominated as your main residence.
Inheritance Rules
For inherited properties, CGT is usually calculated when you sell. The cost base is generally the property’s market value at the date of the original owner’s death if they acquired it after 20 September 1985.
Small Business Concessions
Business owners may qualify for additional concessions on property used in their business, such as the 15-year exemption, retirement exemption, and rollover provisions. Strict conditions apply.
Example Calculation
Purchase price (cost base): $500,000
Selling price (capital proceeds): $700,000
Capital gain: $200,000
If held for more than 12 months and eligible for the 50% discount: Taxable Gain = $200,000 × 50% = $100,000. This $100,000 is added to your assessable income and taxed at your marginal rate.
Reporting & Record-Keeping
You must report capital gains in your annual tax return. The ATO requires you to keep records for at least five years, including purchase and sale contracts, invoices for improvements and renovations, and legal and agent fees.
Conclusion
Capital Gains Tax is a key factor in property sales across Australia. By carefully calculating your cost base, applying eligible discounts, and checking exemptions such as the main residence rule, you can reduce your tax bill and protect more of your profit.
For complex cases like inheritance or small business concessions, professional advice is strongly recommended. At SearchX, we help sellers and professionals stay compliant with property regulations and ensure all contract obligations are handled correctly.
Introduction
When selling property in Australia, one of the most important tax considerations is Capital Gains Tax (CGT). Because property transactions often involve large sums of money, CGT can significantly reduce the profit you walk away with.
Understanding how it works, how to calculate it, and what exemptions may apply can help you plan ahead and minimise your liability.
Why CGT Matters for Property Sellers
Even a modest rise in property value can result in a large CGT bill. For example, a $200,000 profit could mean tens of thousands in tax if you don’t structure the sale carefully.
By knowing the rules and available concessions, sellers can take advantage of exemptions or discounts and better manage their after-tax returns.
What Is Capital Gains Tax?
Capital Gains Tax is the tax you pay on the profit made when selling an asset such as property. It is not a separate tax but forms part of your income tax. Your capital gain is calculated as: Capital Gain = Capital Proceeds – Cost Base.
CGT generally applies when you sell a property, with the main exception being your primary residence, which is usually exempt.
When Do You Pay CGT?
A CGT event occurs when you sell a property, transfer ownership such as through gifting or a divorce settlement, or inherit and later sell a property (rules depend on when the original owner acquired it).
CGT is reported and paid in your income tax return for the financial year when the event takes place.
Steps to Calculate CGT on Property
Step 1: Work Out the Cost Base
The cost base usually includes the purchase price, stamp duty, legal fees on purchase and sale, renovation or improvement costs that are structural rather than decorative, and selling costs such as agent commissions and marketing.
Step 2: Work Out the Capital Proceeds
This is typically the total sale price, minus selling costs.
Step 3: Calculate the Capital Gain
Apply the formula: Capital Gain = Capital Proceeds – Cost Base.
Step 4: Apply Discounts (if eligible)
Individuals and trusts may reduce the gain by 50% if the property was owned for more than 12 months. Superannuation funds are eligible for a 33.3% discount. Companies do not receive CGT discounts.
Step 5: Offset Losses
If you have capital losses from other investments, you can use them to reduce your taxable gain.
Exemptions & Concessions
Main Residence Exemption
If the property was your main home for the entire ownership period, you are generally exempt from CGT.
Temporary Absence Rule
If you move out and rent the property, you can still treat it as your main residence for up to six years. If it is not rented, you may continue to claim it indefinitely, provided no other property is nominated as your main residence.
Inheritance Rules
For inherited properties, CGT is usually calculated when you sell. The cost base is generally the property’s market value at the date of the original owner’s death if they acquired it after 20 September 1985.
Small Business Concessions
Business owners may qualify for additional concessions on property used in their business, such as the 15-year exemption, retirement exemption, and rollover provisions. Strict conditions apply.
Example Calculation
Purchase price (cost base): $500,000
Selling price (capital proceeds): $700,000
Capital gain: $200,000
If held for more than 12 months and eligible for the 50% discount: Taxable Gain = $200,000 × 50% = $100,000. This $100,000 is added to your assessable income and taxed at your marginal rate.
Reporting & Record-Keeping
You must report capital gains in your annual tax return. The ATO requires you to keep records for at least five years, including purchase and sale contracts, invoices for improvements and renovations, and legal and agent fees.
Conclusion
Capital Gains Tax is a key factor in property sales across Australia. By carefully calculating your cost base, applying eligible discounts, and checking exemptions such as the main residence rule, you can reduce your tax bill and protect more of your profit.
For complex cases like inheritance or small business concessions, professional advice is strongly recommended. At SearchX, we help sellers and professionals stay compliant with property regulations and ensure all contract obligations are handled correctly.
SearchX is Queensland's fastest, 100% legally reviewed seller disclosure reports platform tailor made for real estate agents, solicitors and sellers.
Join the SearchX Community
Partnerships
Resources
Copyright 2025 © SearchX
SearchX is Queensland's fastest, 100% legally reviewed seller disclosure reports platform tailor made for real estate agents, solicitors and sellers.
Join the SearchX Community
Partnerships
Resources
Copyright 2025 © SearchX
SearchX is Queensland's fastest, 100% legally reviewed seller disclosure reports platform tailor made for real estate agents, solicitors and sellers.
Join the SearchX Community
Partnerships
Resources
Copyright 2025 © SearchX