How to Avoid Capital Gains Tax When Selling Investment Property in Australia

Capital gains tax is one of the biggest killers of investment returns and can be the killer of your property dreams.

In this video, I'll explain six legal strategies to avoid capital gains tax on investment properties in Australia.

Strategy 1: Consider the timing
It is wise to consider which financial year you choose to sell your investment property in. If you know your taxable income is going to be larger next financial year, it would be best to sell your property in this financial year to make the most of your lower marginal tax rate.

Strategy 2: 50% discount
A capital asset that has been owned for 12 months or more is eligible for a 50% discount of the gross capital gain. So by holding onto your assets for at least 12 months, you can save a significant amount in taxes.

Strategy 3: Primary residence exemption
Your primary residence/family home is exempt from capital gains. Australians may only have one primary residence at a time so carefully consider your options if you have more than one property.

Strategy 4: Six year rule
The temporary absence rule - commonly known as the six year rule - allows Australians to elect a property to be their primary residence for up to six years without actually living in that property.

Strategy 5: Increase cost base
Ensure you include all costs associated with the property when calculating the cost base of your property. The cost base can include: acquisition price, incidental costs (stamp duty, advertising, valuation costs, professional advice), costs of ownership (non-deductible interest, repairs & maintenance, rates, land tax - note that these had to have been non-deductible), and capital costs to increase value (construction, renovations and extensions).

Strategy 6: Utilise capital losses
Offset the capital gain from the sale of your investment property with previous year capital losses, or decide to "tax loss harvest" by selling any other losing capital positions (unrealised losses on shares) to offset the gain in the current year.

[MichaelFrancisVids]

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[NoahNollens]

I agree with you!! Money actually grow on trees but only on trees that was planted by you!! These tress are referred t0 as investments, How you diversify your investment portfolio matters..

[MA-dmxy]

spoken in plain english and explained clearly and concisely. thank you

[MrTheog]

Thanks mate. I need to start looking for those invoices on home improvements.

[haydenwilsonx]

Can also consider making a concessional contribution - and using catch up contributions too. Great work

[OrMon-rf]

Nice video. Simply put. Thanks for not complicating things.

[Estates]

Always love your video's !! Do you have a video on selling rental property and putting the proceeds into a retirement account to save on Capital Gains? Thanks!!

[OnTarget]

Awesome video, thanks for your great work. Just came across your channel and subscribed. like the no-nonsense straight-to-the-point video.

[NolanRaizenberg]

That was great mate, we were just talking about taxes on selling our investment property.

[ThanhNguyen-buxp]

Thanks Michael, very informative and helpful!

[vinayakpai]

Beautifully explained..! Thank you mate.

[australianfarmlife]

I don’t think one can claim interest and land tax if it’s an investment property as those expenses would have been included in the deduction when you do the annual tax return. ATO example did not include these expenses. But I am happy to be corrected.

[RedImaginationbyGG]

Great information mate! Much appreciate this 😃👍 Just subbed! Cheers!

[SuperTambo]

when you do any renovations for the intended sale, can this be claimed against the cost based (ie reduce CGT) or does it go against general claims such as interest, rates, etc?

[benbinary]

Thanks Michael - your video just explained to me how to save $40k and possibly CGT on another 6yrs, soa lot lot more $$$. Champion

[fre]

more of this please, love your content

[iantag]

Thank you for a concise and on-point structured presentation. ( many others could learn this style from you !! ).

[jggiango]

Amazing videos! I regret I haven’t subscribed to your channel before I bought an investment property 2 years ago. At least it’s not too late

[teenguyennn]

mate thank you so much for the guide. actually answer many of my questions. Thank you thank you thank you.

[pbottiglione]

Thanks for this video just few comments. Cost of ownership is normally not in the CGT calculation as claimed separately as deductible expense every year the property is rented. Also the depreciation isn't this deducted from the cost base? This is again because it was already claimed as deductible expense every year the property is rented.