Capital Gains Tax

How to avoid capital gains tax when selling property

Profiting from property doesn't necessarily have to come with stinging capital gains taxes. Find out how you can avoid paying CGT.
 
If you invest in property, capital gains tax (CGT) will raise its head when you're at your happiest - when you make a profit from the sale of a dwelling.
 
But it is possible to make healthy profits from real estate and avoid paying CGT. 

How much CGT will I 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 of the original purchase price, plus any incidentals, ownership and title costs minus any government grants and 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 after 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