PRD Whitsunday

230 Shute Harbour Road, Cannonvale, QLD 4802

07 4946 2000

Capital gains tax on family homes clarified

Most people are aware that their family home or principal place of residence is exempt from capital gains tax. This is provided that the home is held in the homeowner’s personal name and not in the name of a family trust or company.

The interesting part is that you can be absent from your home and have it rented out for up to 6 years without losing the CTG exemption. If the property isn’t earning any income the period of time you can be absent from it without is infinite providing you have lived their first.

For example, it is becoming increasingly common for people to buy a home as their residence to access the concessions that go with homeownership. Then after a fairly short period of occupancy rent the property out, only to return to their property within six years to reap the benefit of the CTG exemption.

When defining occupancy for CTG purposes the ATO looks at every case individually, as such there is list of prescribed criteria you must satisfy.

This being said the factors taken into account by the ATO include the following:

-          Time you lived in the property

-          The place of residence of your family

-          Presence of personal belongings

-          Your address on the electoral roll

-          The address to which your mail is delivered 

-          Service connections such as telephone, gas and electricity

In essence it is a requirement that you are genuinely living in the property as a permanent resident and you will be required to prove this to claim the CTG exemption.  Additionally, there is no requirement that you declare your principal place of residence until you decide to sell.

As you can see, it is important anyone with a potential CTG tax bill on their hands or those considering going through the motions to avoid this scenario must consult their accountant before any steps are taken.  As the idiom goes “There aren’t many certainties in life except death and taxes” It’s to late to rewrite history once the deed is done.