Your home is generally exempt from tax. But if you have an investment property, build or renovate for profit, deal in land, or use a property in running a business, there may be implications for income tax, capital gains tax and goods and services tax (GST).
CAPITAL GAINS TAX (CGT)
A capital gain or capital loss on an asset is the difference between what it cost you and what you receive when you dispose of it.
You pay tax on your capital gains. It forms part of your income tax and is not considered a separate tax – though it's referred to as capital gains tax (CGT).
If you make a capital loss, you can't claim it against income but you can use it to reduce a capital gain in the same income year. And if your capital losses exceed your capital gains in an income year, you can generally carry the loss forward and deduct it against capital gains in future years.
All assets you’ve acquired since tax on capital gains started (on 20 September 1985) are subject to CGT unless specifically excluded.
Most personal assets are exempt from CGT, including your home, car, and most personal use assets, such as furniture. CGT also doesn’t apply to depreciating assets used solely for taxable purposes, such as business equipment or fittings in a rental property.
If you’re an Australian resident, CGT applies to your assets anywhere in the world. Foreign residents make a capital gain or capital loss if a CGT event happens to an asset that is 'taxable Australian property'.
For more information, please contact us or visit the ATO website.