Any tax payable on selling a holiday home?

Question to all the tax experts.

If you own a holiday home and you sell it, is there any CGT or other type of tax payable?

The home has never been rented out to anyone.

 

Yes. Unless the home was used as your PPOR which means you could get it tax free if you have played your cards right (bit of a stretch and the facts would need to show you lived in it as a PPOR).

You have a taxable Australian asset and you are selling it. That creates a CGT event.

The holding costs of the property can add to your cost base in some situations so we often find the gain is small. You might have to go back since day one to pick up rates, land tax, interest repairs and so forth.

You should probably get the CGT discount as well if you make a gain.

The fact it is not rented, by itself, does not impact the capital gains tax treatment.

Sorry mate. It is probably best to do the calcs to see the damage - it might be nil once the holding costs are all included.

 

Yes you'll pay tax on any capital gain on property that is not your PPOR.

 

It can be quite easy to evidence that the place is a main residence. This is NOT the same as a "principal place of residence" which is a land tax rule. CGT has a very different view and the word 'Principal" isnt considered. The word "main" has no definition in tax law and its ordinary meaning is used. Various tests of occupancy and evidence are used by the Commissioer to attack or refute a claim to occupancy as a main residence. It is very easy to maintain more than one home and both may well be your main residence at the time of original occupancy and thereafter at various times. Once established, absences are permitted for unlimited periods where the residence is not rented.

There are a various strategies some use to minimise land tax and also CGT. These include the main residence exemption and electing which property is your main residence IF available. While it may not "avoid" CGT the process can certainly defer CGT from one property to another. The downside is that choice, where available, may mean choosing a exemption now but this defers CGT to the other property so it is not exempt for the same period but the CGT is effectively deferred until taht property is sold (if ever). The deferral method can sometimes bite too - You cannot predict that the exempt CGT will be more than that deferred.

Personal tax advice should be obtained.