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HSM2020(Enthusiast)Enthusiast
13 June 2024

Recently, I bought a house for my immediate family (parents) to live in. I would like to find out if this is going to be defined as an investment property. There will be no rental income as I don't intend to get any income from my parents. I would like to ask, under this situation, since there is no income, I won't be able to claim any expenses related to it. When I sell the property, do I need to pay capital gains tax, and will the purchase price of the house be considered the capital base? Also, I am not sure if I need to pay land tax for it. Please advise.

Thank you.

2,836 views
1 replies
2,836 views
1 replies

Most helpful response

Most helpful reply

Taxduck(Taxicorn)Taxicorn
13 June 2024

There is no definition of investment property for tax purposes. A property can be your main residence or not. You can only have one main residence at any one time so if you own more than one residence then one can be your main residence (so CGT exempt) and the other will not be exempt from CGT. See what a main residence is defined as:

https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-home/eligibility-for-main-residence-exemption

The property that is not your main residence when sold will be subject to CGT. Keep records of all costs associated with the property. See this link on what to keep.

https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/calculating-your-cgt/cost-base-of-asset

Land tax is a state tax, nothing to do with the ATO. Need to contact the responsible state authority.

All replies

Most helpful reply

Taxduck(Taxicorn)Taxicorn
13 June 2024

There is no definition of investment property for tax purposes. A property can be your main residence or not. You can only have one main residence at any one time so if you own more than one residence then one can be your main residence (so CGT exempt) and the other will not be exempt from CGT. See what a main residence is defined as:

https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-home/eligibility-for-main-residence-exemption

The property that is not your main residence when sold will be subject to CGT. Keep records of all costs associated with the property. See this link on what to keep.

https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/calculating-your-cgt/cost-base-of-asset

Land tax is a state tax, nothing to do with the ATO. Need to contact the responsible state authority.

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