What Are the Tax Implications of Selling a Property in Australia?

Selling a property in Australia can trigger several tax obligations that may impact your final profit. Whether you're selling your primary residence, an investment property, or commercial real estate, understanding the tax rules—especially Capital Gains Tax (CGT) and Goods and Services Tax (GST)—is essential for staying compliant and maximising your return.

Here’s a breakdown of the key tax considerations when selling property in Australia.

1. Capital Gains Tax (CGT)

• CGT applies to the profit made from selling investment properties, second homes, or commercial real estate

• The gain is calculated as the difference between the sale price and the original purchase price (plus associated costs)

• If the property was held for more than 12 months, individuals may be eligible for a 50% CGT discount

💡 Selling your main residence? You may be exempt from CGT under the main residence rule.

2. Main Residence Exemption

• Your primary home is generally exempt from CGT if it was your main residence for the entire ownership period

• Partial CGT may apply if the property was rented out or used for business purposes during ownership

• The exemption may still apply for up to 6 years if you moved out and didn’t designate another main residence

💡 Keep detailed records of occupancy and rental periods to support your exemption claim.

3. Goods and Services Tax (GST)

• GST typically applies to new residential properties and commercial real estate—not established homes

• Developers selling newly built homes may be required to remit GST on the sale

• GST is not usually payable on private residential sales unless you're registered for GST and selling as part of a business

💡 If you’re unsure whether GST applies, consult a tax professional or refer to ATO’s GST guidelines.

4. Deductions and Property Sale Costs

• Capital improvements (e.g. renovations) may reduce your CGT liability if properly documented

• Selling costs such as legal fees, advertising, and agent commissions can be deducted from your capital gain

• If you sell at a loss, the capital loss can be used to offset future capital gains

💡 Keep all receipts and records to maximise your allowable deductions.

5. Foreign Resident Capital Gains Withholding (FRCGW)

• Non-residents selling Australian property valued over $750,000 may be subject to a 12.5% withholding tax

• Australian residents are generally exempt, but foreign sellers must apply for a clearance certificate to avoid automatic withholding

💡 Foreign investors should review ATO’s FRCGW rules before listing their property.

How to Reduce Your Tax Liability

• Hold the property for more than 12 months to qualify for CGT discounts

• Ensure the property qualifies as your main residence to claim full exemption

• Deduct eligible expenses such as legal fees, renovations, and marketing costs

• Seek advice from a qualified accountant or tax advisor to optimise your tax position

💡 Proactive planning can save you thousands at tax time.

Final Thoughts

Understanding the tax implications of selling property in Australia is key to avoiding surprises and maximising your net proceeds.

• CGT applies to most investment and commercial properties, but exemptions exist for main residences

• GST is generally limited to new or commercial properties

• Accurate records and professional advice can help reduce your tax burden

💡 Selling privately? salebyhomeowner.com.au offers expert tools, legal support, and national exposure—helping you sell efficiently while keeping more of your profit.