Selling Property in Australia: How Much Tax Will You Pay?
- May 1
- 2 min read
Selling property can trigger one of the largest tax bills you will ever face. Most people only think about it at the point of sale. That is too late.
If you do not plan properly, you can easily overpay tax by tens or even hundreds of thousands.
When Do You Pay Tax on Property?
You only pay tax when a CGT event occurs. This typically happens when:
You sell an investment property
You transfer ownership
You gift a property
You lose ownership through legal or financial events
The gain is calculated as:
Sale price minus cost base
Key Factors That Determine Your Tax
Main Residence Exemption
If the property is your primary home, you may not pay any tax at all.
However, this is where most mistakes happen.
You cannot automatically claim this exemption if:
The property was rented at any stage
You moved out and kept it as an investment
It is owned by a trust or company
The ATO is actively reviewing incorrect claims.
Investment Property CGT
If the property is an investment:
You will pay tax on the capital gain
The gain is added to your taxable income
You pay tax at your marginal rate
Holding Period Discount
If you hold the property for more than 12 months:
You may be eligible for the 50% CGT discount
This halves the taxable portion of your gain
With the proposed changes, this benefit may no longer be as generous.
Cost Base Calculations
Your cost base is not just the purchase price.
It includes:
Stamp duty
Legal fees
Renovation costs
Selling costs
If you miss these, you will overpay tax.
Common Mistakes We See
Claiming the main residence exemption incorrectly
Forgetting to include renovation costs
Not applying the 6-year rule properly
Selling without understanding tax timing
Current ATO Focus
The ATO is heavily reviewing:
Main residence exemption claims
Property sale reporting
Data matching with land titles and banks
If your numbers do not align, you will be flagged.
How to Reduce Your Tax Legally
Time the sale across financial years
Offset gains with capital losses
Maximise your cost base
Consider ownership structure
These strategies must be done before the sale, not after.
Final Word
Property tax is not something you “figure out later”.
By the time the contract is signed, most planning opportunities are gone.
Before you sell, speak to us. A simple strategy could save you thousands in tax.
