When buying a new home before selling your existing one, there are several factors to think about, such as financing, storing your belongings, and the timing of everything. A key tax consideration is that, under capital gains tax (CGT) rules, you generally can't have two homes exempt from CGT at the same time.
However, there is a useful tax rule called the “changing main residence concession.” This rule gives you a six-month window where both your old and new homes can be treated as CGT-exempt. To take advantage of this, you must sell your original home within six months of purchasing the new one, even if you've already moved into the new home.
But the rules can be tricky. If you go over the six-month limit, you'll need to calculate a partial CGT exemption for one of the homes. Additionally, renting out your old home during the six months could affect your eligibility for the concession. It's also important to note that the Australian Taxation Office (ATO) does not have the authority to extend the six-month period, even in special circumstances.
While it may seem like this rule isn’t closely monitored, it remains part of the law.
If you’re considering using your self-managed super fund (SMSF) to buy property, you’ll need the right structure in place. One of the main ways to do this is through a Limited Recourse Borrowing Arrangement (LRBA).
Most Australians who’ve owned their home for 3+ years have built significant equity.
The big question is: are you putting it to work, or letting opportunity slip away?
In our latest blog, I share common mistakes to avoid when leveraging equity for investing — and we’ve also included a 7-Step
Checklist
you can use straight away.
Buying a property off the plan can be an attractive option, but it comes with unique capital gains tax (CGT) implications. Because settlement may take place months—or even years—after signing the initial contract, it’s important to understand how CGT rules apply.