Capital gains tax (CGT) is a federal tax that may apply when you sell a property in NSW. The rules depend heavily on whether the property has been your main residence, when you bought it, and how it has been used.
This guide is general information only and is not tax advice. Always confirm your specific situation with a qualified accountant or tax adviser.
The main residence exemption
If a property has been your main residence for the entire time you owned it and was never used to produce income, it is generally exempt from CGT.
Eligibility rules are detailed, partial use for income, periods of absence, and ownership structure can all affect the exemption.
The 6-year rule
If you move out of your main residence and rent it out, you may still be able to treat it as your main residence for CGT purposes for up to six years, provided you do not nominate another property as your main residence in that period.
This rule can extend if you move back in and then move out again, but the detail matters. Speak to an accountant before relying on it.
The CGT discount
Individuals who have owned a property for more than 12 months generally qualify for a 50% CGT discount on the gain. Different rules apply to companies and some trust structures.
Foreign residents are generally not entitled to the discount on Australian property gains.
Record-keeping
Keep records of the original purchase price, stamp duty, legal fees and any capital improvements. These reduce the assessable gain when you eventually sell.
General information only. This guide is not tax, legal or financial advice. Speak with a licensed accountant, conveyancer or solicitor about your specific situation.
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