Hi all,
I know you dont pay capital gains tax when you sell your house that is your main residence but do you still pay income tax as it is not an investment property? I found this on the ATO site under guide to property. (Bold emphasis is mine)
In most cases there are no tax implications for the home that you live in, and no tax implications when you sell it. This situation may change if you rent out part of your home or use it for work, or it's on more than 2 hectares of land.
Example: I purchase land and build a house for $250k, live in for at least 12 months and class it as my main residence. This is done in my wifes name who is a stay at home mum and doesnt earn an income. I then sell it for $350K after the year.
Making it simple lets say its the full $100K profit from the sale that my wife will put on her tax statement.
Question: Does she get charged income tax for this considering it is from selling our primary residence?
Eg.Will she pay the marginal rate of whatever she earns in that tax year (which would be $100K so in the 37% range)
Or is it classed as tax-free no matter what the amount profit, whether $5K or $500k?
Daniel H
Hi Daniel,
First off anytime you incur capital gains, it is added and forms part of your taxable income for the year, and is then taxed at the appropriate rate.
However, in your case if it is indeed your main residence (and no part of it was rented out, etc) then there is no capital gains, and therefore no tax to be paid on the profit (and will be tax free no matter what the amount).
Normally there is no CGT payable on your own home. The ATO comment in your original post highlights that CGT will be payable if you rented out part of your home.
Based on the information you have originally provided this does not seem to apply in your situation as you have only discussed capital profits and there is no mention of rooms or part of your house being let.
N.B. There may be some CGT payable if your house is located on a block of land more than 5 acres in size.
Awesome, thanks Tom and Derek for commenting and letting me know. Appreciate it.
Daniel
You must be logged in to reply to this topic. If you don't have an account, you can register here.
