When it comes to property there can be tax implications depending on what you planning on doing with your property. Generally the family home is exempt, however there are a few exceptions to this. In summary we list the types of properties and the potential tax effect.

The Family Home
Generally the family home is exempt from tax, even when you sell it. However this may change if you use a portion of your family home as a business premises or rent out a part of your family home for accommodation or it is on more than 2 hectares of land.

Inheriting a Property
When you inherit a property there is usually no tax implications, however when you decide to sell that property it may be subject to capital gains tax.

Residential Rental Property
If you have an residential investment property that you rent out to others, you must include the income generated from the rental of that property, however you can also claim tax deductions for many related expenses to do with your rental property. When you sell the property it may be subject to capital gains tax.

Vacant Land
Generally vacant land is classified as a capital asset and therefore when you sell it, it would be subject to capital gains tax. An exemption to this would be that if you bought the land for resale to earn a profit or you use the land in a business-like manner, then it would be considered as trading stock. You would need to be registered for GST and the income would need to be reported to the ATO.

Subdividing
If you decide to sub-divide your land, even if the land is adjacent to your family home, the sub-division will be subject to capital gains tax. However as in the case of vacant land if you bought the land for resale to earn a profit or you use the land in a business-like manner, then it would be considered as trading stock. You would need to be registered for GST and the income would need to be reported to the ATO.

Property Development, building and renovating
If you build residential housing for the purpose of resale, you need to remit GST on the sale to the ATO and you will be entitled to claim tax deductions for costs relating to the construction of the housing.
If you renovate a property with a view to sell it for a profit, there could be tax implications.

Property used in running a business
If you use your property to run a business, whether it be a commercial property or your own home, there will be tax implications whilst using it and when it comes time to sell it. You may also be entitled to claim GST credits when you buy, sell lease or rent commercial property, however you will also be subject to GST on income.  

If you would like more information regarding your property situation contact us today.  

The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.