Tax Tip – Main Residence Used for a Business – How Capital Gains Tax Applies

Generally, you can ignore a capital gain or loss you make when you sell your home. However, you may have to pay capital gains tax (CGT) when you sell your home if you have used any part of it for business purposes.

The liability for CGT is not removed just because you did not claim occupancy or running expenses as a tax deduction. The test is whether you were eligible to claim. However, you may be eligible for the Small Business CGT Concessions, to reduce or eliminate your CGT liability.

CGT will not apply if any of the following apply:
– you do not have an area specifically set aside for your business activities or,
– you operate your business through a company or trust and you do not charge the company/trust rent for the use of your home. This applies even if the company lists the home address as its Principal Place of Business at ASIC.

(Source: ATO)

To discuss the new super rules further and/or to review your retirement plan click here for a complimentary meeting with a Property Planning Australia Financial Adviser.

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