Capital Gains Tax (CGT) applies to profits from the sale of property or investments. Understand how CGT works and ways to minimise your liability here.
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Capital Gains Tax (CGT) is a tax on the profit made from the sale of an asset, such as real estate. In Australia, if you sell a property for more than you paid for it, the profit (capital gain) is subject to CGT.
For non-residents, CGT is calculated on the capital gains from the sale of Australian property. The cost base includes the purchase price, plus any associated costs like stamp duty and legal fees. The capital gain is the sale price minus the cost base.
Non-residents are not eligible for the 50% CGT discount that Australian residents can claim for assets held longer than 12 months. However, certain exemptions may apply, such as for properties that were your main residence under specific conditions.
You should keep detailed records of the purchase price, acquisition costs, improvements made, and the sale price of the property. These records are essential for accurately calculating your CGT liability.
Currency fluctuations can impact the amount of CGT payable, as the capital gain must be calculated in Australian dollars. Gains or losses due to currency exchange rate changes need to be taken into account when determining the capital gain.
Reinvesting the proceeds from the sale of a property does not exempt you from CGT. The gain must be reported in the tax year the property is sold, regardless of how the proceeds are used.
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