CGT – Exemption from Tax

No Capital Gains Tax on your main residence, but what if I move out?
Most people understand that there’s no Capital Gains Tax (CGT) on any profit you make when you sell your home because the Tax Office has the “main residence exemption”. But what’s the story when you leave your main residence temporarily; do you lose the exemption and have to pay CGT?

CGT Going overseas What if you want to:

  • move because of a temporary job transfer,
  • go overseas to study, or
  • take an extended overseas holiday.

Well the good news is that can still keep your exemption under certain circumstances.
If you:

  • use your vacated home to produce income, you can choose to treat that home as your main residence for a period of up to six years,
  • do not use your vacated home to produce income, you can choose to treat it as your main residence for an unlimited period after you cease living in it.

Can I have 2 main residences?
If you choose to treat that home as your main residence, you cannot nominate any other dwelling as your main residence during your period of absence, even if you actually live in that other dwelling.

Moving Home?
There is one exception – the maximum six-month period you can qualify for the exemption on two homes when you are moving from one main residence to another.

When do I need to choose?
You must make the choice by the day you lodge your tax return for the income year in which the CGT event happens, i.e.: selling your house. The ATO uses information on your tax return as evidence of your choice.

If you want to know more, call the office on 03 9585 7555 and ask for Noel, Amanda or Erina, orcontact usby email.

Previous post:

Next post: