Your home and other real estate
Most real estate - but generally not your 'main residence' (family home) - is subject to the same capital gains (CGT) rules as other assets. This includes vacant land, business premises, rental properties, holiday houses and hobby farms.
Timing of a real estate CGT event
When you sell or otherwise dispose of real estate, the time of the CGT event is generally when you enter into the contract, not when you settle. If there's no contract, the CGT event is when the change of ownership occurs.
Selling your home
You can generally claim the main residence exemption to ignore a capital gain or capital loss from a CGT event that happens to your home. To get the exemption, the property must have a dwelling on it and you must have lived in the dwelling.
Dwellings, adjacent land and associated structures
If you're selling your home, you can generally claim the main residence exemption for:
- the dwelling you live in - a dwelling is anything that is used wholly or mainly for residential accommodation
- the land sold with the dwelling, up to a limit of 2 hectares - additional land is subject to CGT
- any associated structures, such as a separate laundry or garage.
The dwelling, land and associated structures must be used for private or domestic purposes to qualify for the exemption.
Keeping records of costs associated with your home
While your family home is generally exempt from CGT, when you get a home you should try to keep all records relating to it in case your circumstances change. If they do, your home may cease to be fully exempt and you will need to know its full cost so that you don't pay more CGT than necessary.
Keeping records for an inherited main residence
If you inherit a house that was the main residence of the person who left it to you, a capital gain on its subsequent disposal may be exempt from tax. However, until you know this, keep records of relevant costs incurred by you and the previous owner.
Selling your rental property
You may make a capital gain or capital loss when you sell (or otherwise cease to own) a rental property. If the sale of your rental property includes depreciating assets, you'll need to apportion your capital proceeds between the property and the depreciating assets.
Sections within Your home and other real estate
Last Modified: Wednesday, 30 January 2013