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  • How capital gains tax applies

    A capital gain is where you sell an asset, such as a house, and make a profit. Any gain you make is assessable income and you must include that amount in your tax return for the year that you make the profit. The amount of tax you pay on a capital gain depends on a range of factors including when you bought and sold the asset, your other taxable income, and how you use the asset.

    Profit from the sale of your main residence is usually exempt from capital gains tax (CGT). However, if you use it to earn income, for example by renting out a room on a sharing economy platform, you are no longer eligible for the full CGT exemption on a main residence. You will lose a portion of your main residence exemption based on the floor area rented out, and the length of time it was rented.

    There are some circumstances where you won't lose the CGT main residence exemption, for example where you move completely out of your main residence to live in another home for a period of time.

    If you use a sharing economy platform to rent out all or part of a property that you don't own, CGT doesn't apply to you.

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    Last modified: 05 Sep 2017QC 53227