COVID-19 UPDATE: Builders remain open, and iBuildNew's independent experts are available to guide you through your home-building journey. Find out more Close

What does Capital Gains Tax mean for you?


Capital gains tax can be a complex thing to wrap your head around, especially when you’re first introduced to it. Like most tax and accounting related topics, it is a matter of unpacking and making sense of everything slowly and surely. This is our guide to what capital gains is and how it applies, as well as how it will impact on your property transactions.

What is capital gains tax?

The capital gains tax is a government levied tax on the profit made from selling particular types of assets, including property. In very simple terms, a capital gain is calculated through determining the total sale price minus the original cost of the asset, less any selling costs.

When does it apply?

Capital gains tax applies in the financial year a capital asset is sold. The date of the contract is deemed to be the transaction date for capital gains, not the settlement date, so be conscious of this depending on which tax year you want the gain (or loss) to be attributable. This can be particularly important when transactions are being completed around the June or July timeframe, ie. close to the 30 June financial year end.


How much is it?

Unlike some tax jurisdictions, in Australia there is no set rate applied to capital gains tax, but rather an individual’s marginal tax rate applied. Capital gains are calculated as the difference between sale price, less associated selling expenses, agent commission, solicitor fees, building inspections and so forth, less the original purchase price. If you are an investor and have been claiming building allowances and depreciation on the fixtures and fittings of the investment property, the amounts claimed also need to be deducted from the original cost (or cost base) of the property when calculating the taxable capital gain.

A 50% discount on capital gains tax is then applied if the asset is held for more than 12 months, although a new proposal by Labour could see this reduced to 25%. The discounted gain is included in the individual’s tax return as assessable income, along with their employment income and any other income, with normal marginal rates of tax then applied.

Are there any exceptions?

The main exception is in relation to property, which is the principal place of residence exemption. This means the sale of your family home is capital gains tax-free.

If your home is built on land over two hectares, not all of the gain will be exempt. Providing a property to a member of your family will, in most cases, not exempt you from capital gains tax. Exceptions to this would be circumstances, such as a via a will, or family trauma. A property which has been ‘gifted’ will be declared to be the market value at the time of the transfer of the property. We recommend you always seek tax advice from a certified accountant if you face any of these more special cases.


Can capital gains tax be minimised?

Yes, your capital gains tax can be minimised over time, specifically if you hold the property for more than 12 months where you get access to the 50% CGT discount. You will need to ensure you maintain all records of every cost in relation to the purchase of your property, and sale of your property. You will also need to provide records for any improvements to the property while it’s yours that you may be claiming depreciation on.

How can iBuyNew help?

Need help getting started? iBuyNew will point you in the right direction! Whether you are looking for apartments, townhouses or house and land packages, working closely with an iBuyNew property consultant, who understands the market, will help you find something suitable that’s tailored to your needs and requirements. Get in touch with them on 1300 123 463.

Emily Felton

Following a degree in Marketing, Emily cut her teeth in the world of journalism, writing features for various national publications. Her particular areas of interest are sustainable housing, renovation and good old interior design.


iBuildNew is the market leading aggregator dedicated to residential home construction and land development. As an independent platform, iBuildNew helps Australians identify and compare new home designs, house and land packages and land estates. It’s the smart way home buyers, who are considering a new build, can find the ideal options to match their individual needs. Home building is a big decision, we make sure you get it right.

You may also like

May 15, 2019

Important Questions to Ask When Seeking a Property M...

Many savvy investors spend a large amount of time and effort in researching the market ...
Read More
May 10, 2018

Invest With Your Head Not Your Heart With These Prop...

There are a number of things appealing about property investments. Not only can they se...
Read More
Apr 04, 2018

6 Reasons You Should Use A Property Management Compa...

If you have invested in property, leasing it out is one of the most financially rewardi...
Read More
Oct 09, 2019

What Type Of Investment Property Is Right For You?

After saving up and making all the preparations, the exciting stage of choosing an inve...
Read More

9 Must-Have Features of the Most Lucrative Investmen...

If you’ve read the news lately, then you’re no stranger to the state of the Australian ...
Read More
Jun 24, 2019

5 Tips To Help Improve Your Investments

If you are already on the way to creating an investment portfolio, then chances are you...
Read More
Sep 05, 2019

Pros and Cons of Investing in a Granny Flat

Traditionally viewed as the territory of teenagers or grandparents, granny flats can al...
Read More
Mar 15, 2017

Tips To Make Property Investment Easy

Originally posted here Building a new home and property investment can feel like a scar...
Read More
May 13, 2017

What Is Negative Gearing And What Does It Mean For You?

Negative gearing is an investment practice in Australia that involves investing borrowe...
Read More
Nov 13, 2019

Mistakes to Avoid When Investing In Property Through...

While using a self-managed super fund (SMSF) to buy and invest in property is becoming ...
Read More
May 14, 2018

Benefits of House and Land Packages as a Rental Inve...

A house and land package can be a smart idea if you are seeking to make a property inve...
Read More
Apr 05, 2019

The great investment debate: Apartment VS House

The apartment vs house has been a great debate for a long time. Choosing between invest...
Read More
Dec 12, 2018

WA announce $421 million expansion programme for Key...

Premier Mark McGowan has announced a predicted budget surplus in the forthcoming mid-ye...
Read More
May 14, 2018

Make Sure You Talk To These 3 Property Investment Ex...

Starting your investment journey can be an incredibly exciting and stressful process, b...
Read More
Jul 20, 2018

How Real Estate Investment Can Help You In Retirement

Real estate investment has long been viewed as an enormous support financially for self...
Read More
Feb 24, 2017

Understanding the Secret Language of the Lawyer

When you build a house, the entire process can seem somewhat overwhelming. However, at ...
Read More
Jun 12, 2018

3 Big Things That Will Make Great Real Estate Invest...

Location Want to ensure you've made a great real estate investment opportunity? Repeat ...
Read More
Jun 25, 2018

Changes to Victorian Tenancy Laws

Tenancy laws have not seen much change for the last 20 years in Victoria. Although rece...
Read More

Checklist For Your Investment Property Plan

Property investment is not a simple task, and getting financially ready for an investme...
Read More
Mar 13, 2018

6 Things You’ll Need In Your Investment Property

Ready to start your investment property journey? Considering all aspects of your invest...
Read More
Feb 27, 2018

7 questions you have about your residential contract...

We understand that when you are going through the process of purchasing real estate, wh...
Read More
Aug 29, 2019

“Fears” That Trick Us Into Not Investing...

For most, investing in property is an uncertain and overwhelming process. Amidst all th...
Read More
May 30, 2017

Successful Real Estate Property Investment Strategies

Are you looking into investment ventures that promise excellent returns, fast or otherw...
Read More
Feb 08, 2018

Leasing your new build: Understanding the process

The process from your complete house and land package to having a great tenant can seem...
Read More

Get more from

Browse Investment Properties