Capital Gains Tax (CGT)
Tax & Deductions
Tax payable on the profit when you sell an investment property for more than you paid.
Full Explanation
When you dispose of an investment property, the capital gain (sale price minus cost base) is added to your assessable income. If you held the property for more than 12 months, individuals receive a 50% CGT discount, meaning only half the gain is taxed. Your cost base includes the purchase price, stamp duty, legal fees, and capital improvement costs.
Example
You bought for $500,000 and sold for $700,000 after three years. The $200,000 gain is halved to $100,000 under the 50% discount, and that amount is added to your taxable income.
Frequently Asked Questions
How do I reduce my capital gains tax?
Hold the property for at least 12 months to qualify for the 50% CGT discount. You can also increase your cost base by keeping records of capital improvements, and time your sale to a financial year where your other income is lower.
Do I pay CGT on my home?
No. Your main residence is generally exempt from CGT under the main residence exemption. However, if you rent it out for a period, a partial CGT liability may apply.