Is your home really tax free?

The main residence exemption exempts your family home from capital gains tax (CGT) when you dispose of it. But, like all things involving tax, it’s never that simple.

As the character of Darryl Kerrigan in The Castle said, “it’s not a house. It’s a home,” and the Australian Taxation Office’s (ATO) interpretation of a main residence is not fundamentally different. A home is generally considered to be your main residence if:

• It’s where you and your family live
• Your personal belongings have been moved into the dwelling
• It is where your mail is delivered
• It’s your address on the electoral roll
• You have connected services such as telephone, gas and electricity (in your name); and
• It is your intention for the home to be your main residence.

While for most people, your home will be your main residence and be exempt from capital gains tax, there are some situations that can affect this.  To name a few:

• You may have used your home or part of your home to produce income or to run a business from
• Your tax residency may have changed
• Purchasing a second home and not selling your previous home within 6 months
• Renting out a room

If you have a change in circumstances and feel your main residence exemption may be affected give us a call to discuss further.