Hi everyone
Me and my partner are looking a buy a House and move into it and renovate it, then sell then if it goes well buy another house and do the same. So far off the ATO page it states:
Your ‘main residence’ (your home) is generally exempt from capital gains tax (CGT). To get the exemption, the property must have a dwelling on it and you must have lived in it. You're not entitled to the exemption for a vacant block.
Generally, a dwelling is considered to be your main residence if:
you and your family live in it (YES)
your personal belongings are in it (YES)
it's the address your mail is delivered to (YES)
it's your address on the electoral roll, and (YES)
services such as gas and power are connected
Part two also states
You're eligible for a full main residence exemption if the dwelling:
has been the home of you, your partner and other dependants for the whole period you've owned it YES)
has not been used to produce assessable income – that is, you've not run a business from it, rented it out or flipped it, and (As in flipped it is that in reference to making a profit on it ?)
is on land of two hectares or less. (YES)
If the full exemption applies your capital gain or loss is disregarded – you don’t pay tax on any capital gain, but nor can you use any capital loss to reduce your assessable income.
Then theres this also
Building or renovating your home
If you build a dwelling on land you already own, the land normally isn't exempt from CGT until the dwelling becomes your main residence.
However, you can treat land as your main residence for up to four years before the dwelling becomes your main residence if you:
have an ownership interest (other than a life interest) in the land
build, repair or renovate a dwelling on the land (or finish a partly constructed dwelling), and
move into the dwelling as soon as practicable after it's finished and continue to use it as your main residence for at least three months.
If you choose to do this, you can't treat any other dwelling as your main residence for the same period (except for a limited time if you're moving from one main residence to another).
Alternatively, you may be entitled to a partial exemption.
Its very unclear what the CGT I will pay and if will even apply ? If anyone has extensive knowledge I would love to hear it.
Thanks In Advance.
Buying a house to renovate it and sell it for a profit (as you suggest doing) is referred to as "flipping".
Here's some information.
You must report the net profit or loss from renovation in your tax return.
You will note from the example given on the page I linked:
Because the property renovation activities were planned, organised and carried on in a business-like manner, the purpose of buying the property was to renovate it and make a profit, and the renovations were carried on in a similar manner to other property renovation businesses, Fred and Sally have entered into a one-off profit-making activity.