If you're thinking of buying a house to renovate and sell, your profit is what's left of the sale price after four lots of costs (buying, holding, renovating and selling) and then tax. Those costs can swallow most of the price rise you're counting on.

In our example below, a Victorian house bought for $800,000 and sold for $1 million six months later leaves about $48,700 before tax.

Then there's tax, and it may not work the way you expect.

If you buy a property to renovate and sell at a profit, and go about it in a business-like way, the Australian Taxation Office (ATO) usually taxes the profit as ordinary income, not as a capital gain. And if you bought it to flip, living there during the work doesn't make the profit tax-free.

Before you buy, run the sum on your own numbers, ask local agents what buyers in that suburb will pay more for, and talk to a registered tax agent about how your profit is likely to be taxed.

What is house flipping?

House flipping is buying a property, renovating it and aiming to sell it for more than it cost you, usually within months rather than years. The short timeframe and buying in order to sell are what set it apart from investing in property to hold for rent and long-term growth.

Renovation shows make it look quick. In practice, every month you own the house adds running costs, and loan interest if you've borrowed.

Is house flipping profitable in Australia?

It can be, but only if the sale price beats every cost, and the margin is usually thinner than the price rise suggests. Here's an example of a six-month flip in Victoria with a new kitchen, a new bathroom and a repaint. It's an illustration, not a forecast: the figures marked as assumptions are ours, and yours will differ.

So a $200,000 price rise leaves about $48,700. This flip needs to sell for about $950,400 just to break even, which is about 19 per cent more than the $800,000 purchase price. The break-even sits a little below the total costs because a lower price means a lower commission.

The example leaves out some costs, such as loan fees and land tax. In some states, land tax can apply if you own the house on the date it's assessed.

Small changes move the margin a long way. If the work runs three months over, another $11,400 in holding costs cuts the profit to about $37,300. A sale price 2 per cent lower, at $980,000, leaves about $29,000.

If the ATO treats the $48,700 as income and all of it falls in the 30 per cent tax bracket (taxable income of $45,001 to $135,000 in 2026-27), the estimated tax and 2 per cent Medicare levy on it come to about $15,600. That leaves you about $33,100.

What does a flip cost?

A flip's costs fall into four groups, and these guides have the detail for each one.

• Buying: stamp duty, conveyancing, building and pest inspections, and loan fees. Our guide to who pays stamp duty explains how it works, and your state revenue office's calculator gives the figure.
• Holding: running costs, and loan interest if you've borrowed, for every month you own the house, including the weeks it's on the market. In some states, land tax can apply too. In NSW, for example, it's assessed on the land you own at midnight on 31 December.
• Renovating: trades, materials, permits and a contingency. See what a bathroom renovation costs, what a kitchen renovation costs and what smaller pre-sale jobs cost.
• Selling: the agent's commission, marketing and the cost of discharging your mortgage. Our guide to the cost of selling a house breaks these down by state.

How is a house flip taxed?

If you bought the house to renovate and sell at a profit, and went about it in a business-like way, the ATO usually taxes the profit as ordinary income. That means it's taxed at your marginal tax rate (the rate on the top slice of your income), with no capital gains tax (CGT) discount.

The ATO decides by looking at why you bought and how you went about the project, not by what you call it.

The ATO sorts renovators into three groups, explained on its page about renovating properties.

A single flip can count as a profit-making activity. Planning and costing the work before you buy is one of the signs the ATO points to.

Doing it again matters too. In one ATO example, a renovator who repeats a successful first project, aiming for the same kind of profit, is treated as being in the business of renovating.

On a six-month flip, the CGT discount isn't available either way. A profit taxed as income never gets it, however long you own the house, and a capital gain needs at least 12 months of ownership. So on a short flip, one difference between the groups still matters: the main residence exemption, which a flip doesn't get.

Income treatment can help in one way. A loss on a profit-making flip can reduce your other income, while a capital loss can only be set against capital gains.

If you're unsure which group you're in, you can ask the ATO for a private ruling (a written answer on your own situation), and a registered tax agent can help you work it out before you buy. For every tax that can apply when you sell, see our guide to the tax implications of selling property.

Can you avoid tax by living in the house?

No, not if you bought it to renovate and sell, even if you live there during the work. The ATO's main residence exemption rules say a home you've "flipped" (bought to renovate and sell at a profit) doesn't qualify for the full exemption.

As the ATO's guide to how renovating affects your tax explains, the exemption reduces only capital gains, so it can't reduce a profit taxed as income. In some of the ATO's examples, renovators who moved in during the work were still taxed on the profit as income.

It's different if you bought the house to live in.

In another ATO example, a woman buys a run-down house, lives in it while she renovates over a few years, then sells when she moves for work. Because she lived there the whole time and never used it to earn income, she meets the ATO's conditions for the full main residence exemption.

The difference comes down to why you bought and how you went about it. The ATO judges that on the facts, not just on your word. How soon you sell is one of the things it weighs.

Do you pay GST when you sell a flip?

Usually not. Selling an existing home is input-taxed, which means there's no GST on the sale, and you can't claim back the GST on your renovation costs either. That's true even if you're in the business of renovating.

GST can apply if your work is a "substantial renovation", which creates what the law treats as a new home. That means work affecting the building as a whole that removes or replaces all, or substantially all, of it.

The ATO says new kitchens and bathrooms with repainting and minor repairs usually aren't enough, and in one of its examples, $330,000 of work still didn't count.

Knocking down the house and building a new one also creates a new home for GST. If your project creates a new home, and you're registered or required to be registered for GST, GST applies to the sale.

In GST law, an "enterprise" covers a business or a one-off profit-making venture, so even a one-off project can be one. If yours is, you generally have to register for GST once your current or projected GST turnover reaches $75,000 a year. Sales of existing homes don't count towards that turnover.

In some cases, GST is worked out only on your margin, under what's called the margin scheme. The scheme has conditions, including a written agreement with the buyer, so ask a tax agent before you sign a contract to sell.

Is anything changing from July 2027?

If you're an individual, new laws from 1 July 2027 replace the 50 per cent CGT discount on most assets with indexation (adjusting the cost for inflation) and add a minimum tax on some capital gains.

A flip taxed as income isn't a capital gain, so those changes don't apply to its profit.

If you renovate and sell as a personal investor, under a contract signed on or after 1 July 2027, the changes may affect you. If you held the property on 30 June 2027, the part of the gain made before then can still get the discount.

If you also own a rental property, the new negative gearing rules (on claiming a rental loss against your other income) can affect a flip too.

If you own an established rental home (not newly built) bought under a contract signed from 7.30pm (AEST) on 12 May 2026, the new rules apply from the 2027-28 financial year, with some exceptions.

They stop you from claiming those rental losses against your other income. Instead, the losses are held back and carried forward.

If the rules apply to you, the held-back losses, including any from earlier years, can be set against a one-off flip's profit in the year you make it, or against a capital gain if you sell as a personal investor.

Our guide to tax on selling an investment property explains the changes.

How do you find the right property to flip?

A flip works best where the price gap between the house as it is and a renovated one in the same street is bigger than your costs.

• Compare recent sales of tired and renovated homes nearby, and how long each took to sell.
• Check the block, zoning and any heritage or council controls before you plan the work.
• Run your sum before you bid, using the four cost groups above.

Talk to the local agents, the ones who sell in that suburb every week. They can tell you which streets attract higher prices, what buyers there will pay more for, and whether a cosmetic refresh or deeper work is more likely to pay its way.

Can you do the renovation yourself?

You can do some of the work yourself, such as pulling up carpet or painting. In NSW, Victoria and Queensland, licensed or registered tradespeople must do the electrical, plumbing and gas work.

Bigger jobs you manage without a licensed builder need an owner-builder permit (in Victoria, a certificate of consent). In NSW and Victoria, the permit's conditions make it hard to use for a flip.

Victorian owner-builders also can't do demolition or subfloor work, such as restumping. Check the details with the NSW Government, Victoria's Building and Plumbing Commission or the QBCC. In other states and territories, ask your building regulator.

For work you hand to trades, get written quotes, check each tradesperson's licence and insurance, and agree a start date.

What should you renovate to sell?

It helps to start with who will buy the house. Ask agents who buys in that street (families, professionals or investors) and what those buyers pay more for.

Cosmetic work, such as paint, flooring, lighting and a tidy garden, usually costs less and takes less time than structural changes. A new kitchen or bathroom can lift the price. Before you spend $20,000 or more on one, it's worth asking local agents whether it would in that street.

Our guide to the renovations that don't add value covers what to skip.

Plan the work as a timeline. A bathroom alone can involve a plumber, waterproofer, tiler, cabinetmaker and electrician, and if one slips, the others wait while your holding costs keep running.

Selling the finished house

Every week on the market adds to your holding costs, so line up your agent before the renovation ends. Ask them early which finishes buyers in that area pay more for, so you don't overspend in the last weeks.

Compare a few agents on their recent sales of similar homes, their fees and their marketing plan. If you need to sell soon after buying, see how soon you can sell a house after buying it. Our guide to selling a house walks through the steps.

Apply for your ATO clearance certificate early (the ATO issues it free to Australian residents). Without one, the buyer generally must hold back 15 per cent of the price, or of your share if you own it with someone else. It can take up to 28 days, and you'll need to give it to the buyer by settlement.

Where these figures come from

The tax information comes from the 2026 tax reform law, the GST Act, Revenue NSW (for land tax) and the ATO. From the ATO, we used its guidance on renovating properties, its GST rulings, and its pages on the main residence exemption and clearance certificates.

Owner-builder and licensing rules come from the NSW, Victorian and Queensland regulators. We read all of these in October 2026.

The worked example uses our own guides as published in October 2026, plus our internal commission data. The kitchen guide is the exception: it was last updated in July 2025.

The holding, buying, contingency, searches, marketing and styling costs are assumptions, as are the kitchen and bathroom figures. The example leaves out some costs, such as loan fees and land tax. Tax rates are the ATO's resident rates for 2026-27.

This page is general information, not tax or financial advice. Your own costs, profit and tax will depend on your circumstances.