Capital gains tax (CGT) is levied on the profit you make when you sell a property.
How is CGT calculated?
Capital gains tax is based on the difference between the selling price and the purchase price, which can include the sum paid for the property plus legal fees, stamp duty and other upfront costs as well as the value of any capital improvements (renovations) completed by you.
CGT only applies to properties purchased after September 1985. For properties purchased after October 1999, a discount of up to 50% may be available on the capital gain calculated for tax purposes (eligibility is dependent on the ownership structure of the investment- see your tax accountant for more information).
When it comes to calculating capital gains tax, the Tax Office will regard the date you entered the contract to buy the property as the date of purchase - not the settlement date. Check the calendar before you sell, as the discount only applies if you have owned the property for a minimum of 12 months. Capital gains tax can be complex, so be sure to get good advice from your accountant when selling your investment.