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  • Keeping records for real estate

    For real estate you need to keep:

    • a copy of the purchase contract and all receipts for expenses relating to the purchase such as
      • stamp duty
      • legal fees
      • settlement statement
      • survey and valuation fees
       
    • all records relating to the capital gains tax (CGT) event and all relevant expenses such as
      • the sale contract
      • sale settlement statement
      • legal fees
      • sales commission
       
    • records of your costs of owning the property including interest, rates and land taxes, insurance premiums and the cost of repairs as you will only be able to include these costs in the cost base if you acquired your home after 20 August 1991, and haven't or can't claim a tax deduction for them
    • records of capital expenditure on improvements such as extensions, additions or improvements, including initial repairs, and maintaining the title or right to the title during your period of ownership.

    These costs form part of the cost base, which you use to work out whether you've made a capital gain when the CGT event happens. A 'reduced' cost base that excludes costs of ownership such as interest and rates helps you calculate if you've made a capital loss.

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    Records for your home

    Even though your family home is usually exempt you should keep all records relating to it just as you would for other properties.

    If your home stops being eligible for a full exemption in the future you may need to know its full cost so that you don't pay more CGT than necessary. If you don't have sufficient records reconstructing them later could be difficult.

    If you use your home to produce income such as renting out a room or running a business, and:

    • you acquired your home on or after 20 September 1985, you should keep records of expenses during the income-producing period and the proportion of the property used to produce income
    • you start using your home to produce income for the first time after 20 August 1996, you generally need to know your home's market value at the time you first used it to produce income (it's best to value your home at the time but if necessary you can get it valued retrospectively).

    See also:

    Records held by former spouse

    If the CGT rollover applies to a property transferred to you because your marriage or relationship breaks down make sure you get copies of any records you need from your former spouse or the company or trust that owned it. This includes records that show:

    • how and when they acquired it
    • its cost base when they transferred it to you.

    If the marriage or relationship breakdown rollover applies to the transfer of a property that was your former spouse’s home and transferred to you under a CGT event that happened after 12 December 2006, make sure you also get a copy of records from them that show:

    • the extent to which they used it to produce income during their ownership period such as the periods rented or available for rent, and the proportion of the dwelling used for that purpose
    • the number of days it was their main residence during their ownership period.

    You'll need these records to show you're entitled to the main residence exemption for the whole period. This starts from when your former spouse became owner of the property. If you can’t show this you may be liable for CGT for periods the property may have qualified for exemption.

    See also:

    Records for an inherited main residence

    If you inherit a dwelling that was the main residence of the person who left it to you, any capital gain on its subsequent disposal may be exempt. However, until you're sure of the circumstances you should keep records of relevant costs incurred by you and the previous owner, or their trustee or executor.

    You won't need to keep records of the previous owner’s costs if:

    • you inherited the dwelling after 20 August 1996
    • the dwelling was their main residence just before they died
    • they were not using the dwelling to produce income at the time of their death.

    In these circumstances we take you to have acquired the dwelling at its market value at the date of death. If the executor or trustee has had it valued, get a copy of that valuation report. Otherwise you'll need to get your own valuation.

    If you are a beneficiary of a deceased estate and a CGT event happens to your residential property in Australia that you inherited from a foreign resident, you are no longer entitled to claim the main residence exemption for the deceased’s ownership period. There is a transitional period. To find out how this affects you see Foreign residents and main residence exemption.

    See also:

    Records for a foreign resident

    The law recently changed so that foreign residents can no longer claim the CGT main residence exemption. This is unless at the time of the sale or disposal of the Australian residential property, you were a foreign resident for tax purposes for a continuous period of less than six years and during that time one of the following occurred:

    • you, your spouse, or your child under 18, had a terminal medical condition
    • your spouse, or your child under 18, died
    • the CGT event involved the distribution of assets between you and your spouse as a result of your divorce, separation or similar maintenance agreements.

    If you held property before 9 May 2017, you can claim the CGT main residence exemption for disposals that happen up until 30 June 2020. That is, if you meet the other requirements for the main residence exemption. For disposals from 1 July 2020, you can only claim the CGT main residence exemption if one of the above life events occurs within a continuous period of six years of the individual becoming a foreign resident.

    For properties acquired from 9 May 2017, the CGT main residence exemption no longer applies to disposals from that date. This is unless certain life events listed above occur within a continuous period of six years of the individual becoming a foreign resident for tax purpose.

    If you use your home to produce income such as renting out a room or running a business, and:

    • you acquired your home on or after 20 September 1985 then you should keep records of expenses during the income-producing period and the proportion of the property used to produce income
    • you start using your home to produce income for the first time after 20 August 1996 then you generally need to know your home's market value at the time you first used it to produce income (it's best to value your home at the time, but if necessary you can have a valuation done retrospectively).

    If you are no longer eligible for the main residence exemption as a result of these law changes, you may need to know its full cost so that you don't pay more CGT than necessary. If you don't have sufficient records, reconstructing them later could be difficult.

    Last modified: 01 Jul 2020QC 22170