Capital Gains Tax in Australia

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Capital gains tax (CGT) is levied on profit made from the sale of a property. There are a couple of ways to avoid paying CGT. These include:

  • Extending or Renovating the property and then selling it.
  • Buying a property through a self-managed super fund (SMSF).
  • Renting out your home, and then selling it
  • If the real estate was purchased before 20 Sept 1985.


How much CGT do you have to pay?

If you're selling an investment property, the CGT calculation is based on the sale price of a property minus your expenses. These expenses are called your cost base. The cost base is the total sum:

  1. The original purchase price, plus any incidentals,
  2. Ownership and title costs minus any government grants
  3. Depreciable items. Depreciable building items were not included in the cost base calculations prior to 1997.
  • Incidental costs - stamp duty, legal fees, agent fees and advertising and marketing fees.
  • Ownership costs - rates, land tax, maintenance and interest on your home loan. Note that you can only add rates, land tax, insurance and interest on borrowed money to your cost base if you acquired the property before 20 August 1991, or didn't use the property to produce an assessable income e.g vacant land or main residences.
  • Improvement costs - replacing kitchens, bathrooms or any other improvements you've made on the property
  • Title costs - legal fees associated with organising and defending your title on the property


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