​​​​​​​Tax Q&A: Your Questions on further reducing CGT, Answered

By Sarah Megginson | 03 Aug 2017

Our tax experts are on hand to answer any tax queries you may have regarding your property investments and wealth creation strategiesEmail your tax questions to - [email protected].

Q: I purchased an investment property in 2012, which has been rented out since settlement, and another in 2013, which is also rented out. Neither property is my principal place of residence, as I live interstate.

From what I have been reading, when I come around to selling these properties, CGT will be reduced by 50% as I’ve had them for longer than 12 months. Can I further reduce CGT if I were to live in both properties for 12 months before I sell? If so, how – and can it apply to both these properties?

A: Assets owned by an individual for longer than 12 months have the capital gain on sale reduced by 50%. The period of ownership is based on contract dates and not settlement dates. Also, remember that your cost base is reduced by all the building depreciation that you have claimed during the period of ownership.

"Assets owned by an individual for longer than 12 months have the capital gain on sale reduced by 50%"

Twelve months has no meaning when it comes to moving back into these properties in an attempt to reduce CGT. In your case,
the capital gain is reduced by your time in occupation over the whole period of ownership of the property.

For example, if you own the property for five years and live in it for one year, then the taxable profit will be reduced by 20%. You will slowly reduce the tax payable in your circumstances, but it will never come to nil. This will apply to these properties one at a time, as you are not able to have two principal places of residence at the same time, except in very limited circumstances.
Need to know
- Assets owned by an individual for 12 months plus are eligible for a CGT discount.
- This discount allows the capital gain on sale to be reduced by 50%.
- No GST is charged on a principal place of residence.

Mike Wilson is principal of
Wilson Teis Chartered Accountants


While due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.

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