Author: Taxduck(Taxicorn)Taxicorn 27 May 2024
As long as your home is on less than 2ha and has not been income producing in the past then it is exempt from CGT. If you still own the first property while building then this second property will be subject to CGT (only if you sell in the future) for the period up until you move into the new dwelling. Once you move in to the new home you can have up to 6 months to sell the old home (i.e. can regard both homes as your main residence for 6 months)
https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-home/moving-to-a-new-main-residence
If you don't sell within 6 months you can still regard your first home as your main residence indefinitely or up to 6 years if rented. See link on this
https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-home/treating-former-home-as-main-residence
Bear in mind you can only have one main residence at any one time, apart from the 6 month rule ( see first link).
Just to make things more interesting you can regard the new build as your main residence for a period of up to 4 years (this means it would be CGT exempt) See here:
https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-home/building-or-renovating-your-home
If you go this way then your old home will be subject to CGT for the period from when you sign the contract on your new property until it is sold (less 6 months)
With either method you will need to keep all the costs as in the cost base elements. (to minimise any gain)
https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/calculating-your-cgt/cost-base-of-asset
For some reason, nothing is ever simple with tax. Professional advice is always worthwhile.
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