Capital Gains Tax on Property in QLD: What You Need to Know in 2025

Introduction

Capital Gains Tax (CGT) is one of the most important yet often misunderstood tax obligations for Queensland property owners. Whether you’re selling an investment property, subdividing land or transferring inherited real estate, CGT can significantly affect your financial outcome.

With key updates rolling out in 2025, this guide explains when CGT applies, how it’s calculated, and which exemptions or strategies can help reduce your tax burden.

When Does CGT Apply to Property?

CGT applies when you dispose of a capital asset such as real estate. This includes selling, gifting, transferring or otherwise changing ownership of a property. In Queensland, CGT typically applies to:

• Investment properties;

• Vacant land;

• Second homes or holiday homes; and

• Commercial properties.

However, CGT typically does not apply if:

• The property is your principal place of residence (PPR); or

• The sale meets certain exemptions, such as inheritance or hardship provisions.

Understanding whether a transaction is taxable is crucial for accurate reporting and avoiding penalties from the ATO.

How is CGT Calculated?

CGT is calculated on the net capital gain, which is the profit from the sale after deducting allowable costs.

Step-by-Step:

1. Determine the Sale Price: This is the final contract amount minus selling costs like agent commission.

2. Calculate the Cost Base: This includes:

   • Original purchase price;

   • Stamp duty paid;

   • Legal and conveyancing fees;

   • Renovation or improvement costs; and

   • Other holding or acquisition costs.

3. Subtract the Cost Base from the Sale Price to calculate the capital gain.

4. Apply CGT Discount (if eligible): Individuals and trusts that have held the asset for more than 12 months may receive a 50 percent discount.

Example: If you purchased a property for $500,000 with $30,000 in related costs and sold it for $700,000, your gross gain is $170,000. If held for more than a year, you may only be taxed on $85,000 after the discount.

Exemptions and Concessions

Main Residence Exemption
Your principal place of residence is generally exempt from CGT, provided:

• The land size is under 2 hectares;

• You lived in it the entire time; and

• You didn’t use it to produce income (unless the six-year rule applies).

Six-Year Rule
If you move out and rent your former principal residence, you may still claim the exemption for up to six years, as long as you do not claim another PPR.

50% CGT Discount
Applies if:

• You’re an individual or a trust; and

• The property was held for over 12 months.

Inherited Property
CGT may apply when the inheritor sells the property, not at the point of inheritance. The specific tax treatment depends on the original owner's circumstances.

Subdivided or Gifted Land
Subdividing or gifting land can trigger CGT, even if there’s no money exchanged. It’s treated as a disposal event at market value.

Special Situations That Trigger CGT

• Gifting Property: Considered a disposal and valued at the market price.

• Subdividing Land: Each new lot is treated as a separate asset.

• Deceased Estates: Tax depends on the acquisition date and the residence status of the original owner.

• Foreign Residents: May be subject to CGT withholding and additional compliance steps.

Record Keeping Requirements

You must maintain detailed records for all CGT events. This includes:

• Purchase and sale contracts;

• Stamp duty and legal fee receipts;

• Agent commissions;

• Renovation and improvement receipts; and

• Valuation reports and depreciation schedules.

Records must be kept for at least five years after the CGT event is reported.

Tools like SearchX can help you collect and manage these documents, reducing the administrative burden and simplifying compliance.

Strategies to Reduce CGT Liability

• Live in the property to access the main residence exemption;

• Hold the asset for more than 12 months to qualify for the 50 percent discount;

• Offset capital gains with capital losses from other investments;

• Time the sale for a financial year when your income is lower; and

• Consult a tax advisor for structuring more complex transactions, such as trusts or development projects.

Conclusion

Capital Gains Tax plays a critical role in property transactions across Queensland. Understanding when it applies, how it’s calculated, and which exemptions are available can help you avoid surprises and reduce your liability.

If you’re planning to sell, subdivide, or transfer property, it pays to know your CGT position in advance. For added confidence, platforms like SearchX can help you manage documentation and compliance efficiently

Disclaimer: The above information is general in nature and does not constitute financial or tax advice. Everyone’s circumstances are different. You should consult your accountant or tax adviser for advice tailored to your specific situation.