The ATO have a nice gem that is frequently overlooked by many homeowners who seek to renovate their home to enhance value. It is described here : Renovating properties | Australian Taxation Office Read down to the section titled Renovation as a Profit Making Activity The issue is this. Dave and Mary sell their home to buy a renovator special. Their intention is to profit from the increased value of the renovation and propose to sell it after completion. They move in to their new "home" which they plan to renovate and rebuild and sell for a decent profit. In some cases the couple may do this repeatedly however that isnt a requirement. Dave and Mary consider that the profit is exempt from CGT under the main residence exemption. The concern confirmed in the above link is that CGT doesnt apply...Hence no main residence exemption. (Tax Determination 92/135 explains this). Full income tax applies. In some cases the extensive renovations may even trigger GST on the sale. Dave and Mary could end up with a substantial tax problem detected after the sale/s. The ATO could argue avoidance & evasion arising from recklessness in seeking advice etc. They may underpay as much as 9% of the sale price plus half the true tax payable. On a $1m property this could be $150K + penalties + interest. And hanging onto the property for a year or two doesnt "fix" it. Importantly too the ATO clearly split the concern into two main areas 1. Intention to profit and 2. A renovation business. So a profit intention doesnt need to have a business like intention. This is the issue many argue about but the concern is two-fold.