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sassystrawberry(Newbie)Newbie
22 Aug 2024

Hi all, a specific question which I continue to receive conflicting information/advice about:


I purchased a 3 bedroom property in 2019 and immediately moved into the residence with a housemate who rented one bedroom (and had access to the communal areas, i.e. kitchen/bathroom/lounge), the housemate paid rent to me which was declared. We both moved out of the house in 2024 (5 years since contract signed) and a new tenant moved in and is now renting the entire house. 


What capital gains tax will I need to pay (i.e. is it 33% on a capital gain as the housemate was renting 1bdr since day 1 - see calculation below)?


Example with $100,000 sale profit:

33% x $100,000 = $33,000 CGT


Are there any applicable discounts/exemptions? Should I sell or move back in prior to the 6 year mark to reduce CGT?

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Most helpful replyATO Certified Response

AshleyATO(Tax Time Tech Expert)Tax Time Tech Expert
ATO Certified Response26 Aug 2024

Hi @sassystrawberry


When you rent out part of your home you need to work out the floor area that was used to produce income and apportion the capital gain or loss accordingly when you sell the property, we have a guide on our website that takes you through the steps: Using your home for rental or business | Australian Taxation Office (ato.gov.au)


When you sell or dispose of an asset, you can reduce your capital gain by 50% if both apply:

  • You owned the asset for at least 12 Months.
  • You are an Australia Resident for tax purposes.

This is called the Capital Gains Tax (CGT) discount. Please see CGT discount | Australian Taxation Office (ato.gov.au)

 

Have a read of these articles – Your Guide to CGT and property and Renting out all or part of your home? What you need to know for your tax return as these may answer some of your questions.

All replies

Most helpful replyATO Certified Response

AshleyATO(Tax Time Tech Expert)Tax Time Tech Expert
ATO Certified Response26 Aug 2024

Hi @sassystrawberry


When you rent out part of your home you need to work out the floor area that was used to produce income and apportion the capital gain or loss accordingly when you sell the property, we have a guide on our website that takes you through the steps: Using your home for rental or business | Australian Taxation Office (ato.gov.au)


When you sell or dispose of an asset, you can reduce your capital gain by 50% if both apply:

  • You owned the asset for at least 12 Months.
  • You are an Australia Resident for tax purposes.

This is called the Capital Gains Tax (CGT) discount. Please see CGT discount | Australian Taxation Office (ato.gov.au)

 

Have a read of these articles – Your Guide to CGT and property and Renting out all or part of your home? What you need to know for your tax return as these may answer some of your questions.

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