Capital Gains Tax Discount

The capital gains tax discount is a benefit provided to individuals who have held a capital asset for a minimum period before selling it.

What is a capital gains tax discount?

The capital gains tax discount is a benefit provided to individuals who have held a capital asset for a minimum period before selling it. There is typically a 50% discount on the capital gains tax for assets such as properties held for at least 12 months before selling. 

Is everyone eligible for the discount? 

If you’re a foreign or temporary resident selling an asset purchased before 8 May 2012, you may be eligible for the CGT discount. If the asset was acquired after this time, you will not be entitled to any CGT discount despite holding the asset for more than 12 months. 

With this said, all Australian citizens or permanent residents are entitled to the discount if the property has been held for more than 12 months.

Is it possible to pay no capital gains tax on a property?

There are 3 instances where you could be exempt from paying capital gains tax:

Selling a primary place of residence (PPOR)

When selling a home that has served as your primary residence for at least 6 months from the settlement date, you may be eligible for a capital gains tax (CGT) exemption. This rule acknowledges that your primary residence is primarily a living space for you and your family, rather than an investment property aimed at generating profit.

6-year rule capital gains tax exemption

In Australia, the 6-year rule offers a valuable advantage by allowing you to consider a property as your primary residence for tax purposes, even if you're not currently living in it. This means you could be exempt from paying capital gains tax (CGT) on any profits when selling the property.

This provision allows for a CGT exemption for up to 6 years, even if you choose to rent out the property during that time. It’s designed to support those who cannot occupy their home due to work or travel, helping them avoid extra tax upon selling.

Property acquisition before 20 September 1985

If you purchased the property before 20 September 1985, you're exempt from capital gains tax when selling. This date marks when CGT was first introduced, meaning that any assets acquired prior to this date are not subject to this tax.

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