You may be planning to repair or rebuild your home after a disaster. If you decide to sell your home after it has been rebuilt or dispose of the vacant land, check if you are still eligible for the main residence exemption from capital gains tax (CGT).
We know it’s important to get your property back to normal as soon as possible after a disaster.
You might be planning to repair or rebuild your home, which probably means engaging builders and contractors.
We monitor activity in disaster-affected areas to ensure the community is not taken advantage of by businesses undertaking repair and reconstruction work.
You can also take the following steps to protect yourself:
- Make sure the tradespeople you choose are genuine and licenced to do the work. The Australian Competition and Consumer CommissionExternal Link has details of what to look out for. Ask for references and check with the relevant state or territory authority to ensure the builder or contractor is appropriately licensed.
- Genuine businesses have an Australian business number (ABN) quoted on their invoices and documentation. If you're engaging builders or contractors to undertake repair and reconstruction work, check ABN LookupExternal Link to make sure they're a genuine business. Businesses should not charge goods and services tax (GST) unless they are registered for GST.
- Request a written contract or tax invoice before work starts and get a receipt for your payment. This will help protect against issues with insurance, warranties, consumer rights and government regulations.
- Ensure any tax invoices you receive include the minimum requirements, particularly if you want to claim GST credits.
- If you have concerns about work performed or feel you have been overcharged, you can contact your state or territory consumer authority.
- If you suspect phoenix, tax evasion or shadow economy activity, you can report it to the Tax Integrity Centre by:
If you rebuild your home after a disaster and then decide to sell it, it will still be classed as your main residence. Your home is exempt from CGT provided you have both:
- moved back into the repaired or rebuilt property as soon as practicable after the work was completed
- lived there for at least 3 months before selling.
If you carry on an enterprise and are required to be registered for GST, you will need to notify the purchaser:
- if they are required to withhold GST from the purchase price
- that they need to pay this amount to the ATO at settlement.
Example: moving back in as soon as practicable
Louis and Yasmine's home is destroyed by a cyclone. They decide to use the insurance payment to rebuild their home.
They rent a house 20 kilometres away with a 6-month lease and a 6-month option to renew. They enrol their child, Marley, in a school close to their rented home. After 6 months their home is still being rebuilt, so they renew their rental lease.
After 9 months, their new home is complete. However, because Marley is halfway through the final school term and there would be a financial penalty for breaking the lease, the family decide to stay in the rental property until the end of the school term.
In these circumstances, Louis and Yasmine moved back into their home as soon as practicable after the work had been completed.End of example
If your home is destroyed and you sell the vacant land it was built on, you are still eligible for the main residence exemption from CGT.Protect yourself when repairing or rebuilding your home after disaster, and check if your home or land is exempt from capital gains tax if you decided to sell.