The Family Home, CGT & Your Records: What The ATO Needs To Know

Posted on 26 July '22 by , under tax.

Selling your family home is usually exempt from capital gains tax (CGT). However, your entitlement to a full exemption may vary depending on your circumstances, such as renovations to your home or using it for business or Airbnb.

General records to keep which help to form part of the cost base (used to work out if a capital gain or loss occurs) include:

  • A copy of the purchase contract and all receipts for expenses relating to the purchase.
  • All records relating to the CGT event and all relevant expenses.
  • Records of your costs of owning the property (interest, rates, land taxes, insurance premiums, the costs of repairs).
  • Records of capital expenditure on improvements such as extensions, additions or improvements including initial repairs and maintaining the title or right to the title during your period of ownership.

The following records are necessary for homes used as the main residence:

Your Home

If you use your home to produce income (running a business or renting a room out such as AirBNB) you will need to keep records of different costs depending on when you acquired your home.

For homes acquired on or after September 1985, you should keep records of expenses during the income-producing period and the proportion of the property used to produce income.

If you started using your home to produce income for the first time after 20 August 1996 – you generally need to know your home’s market value at the time you first used it to produce income.

An Inherited Home

Inheriting a home that was the primary residence of the person who left it to you means any capital gain on its subsequent disposal (selling of the home) may be exempt. Until you are sure of the circumstances, keeping records of the relevant costs incurred by you, the previous owner, or their trustee or executor is advisable.

Records do not need to be kept of the previous owner’s costs if you inherited the dwelling after 20 August 1996, the dwelling was their main residence prior to their passing away, and they were not using the dwelling to produce income at the time of their death.

In these circumstances, you will be taken to have acquired the dwelling at its market value at the date of death. If you have not obtained a copy of the valuation report from the executor or trustee, you will need to get your own valuation.