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Australia Only...

  • I purchased a property but never actually moved into it; it has been rented since purchased
  • I paid $200K originally (1999) and could sell for over $600K today (2023)
  • So, if I sold it this year I'd book a capital gain of about $400K.
  • I earn ~$100Kpa and pay about $20K income tax pa. (inclusive of rental income)
  • I figure I would have to pay about $80-100K in CGT in the FY year of the sale.

Is that roughly correct?

Now, say I quit my job, then didn't work during the financial year that I sold... how much tax would I pay then.. still $75-80K?

If I moved in for 6 months, would that actually nullify the $100K CGT liability... or is that an urban myth?

I'm weighing up the idea that, if I was ever going to take an extended break from employment this would be the time to do it, but trying to work out how much that would it really cost me, versus continuing to work. Perhaps I should take a 6mth holiday in my unit?

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Capital gains tax is separate and does not offset with your income tax.

There is no CGT on your primary residence but what you suggest will not automatically qualify your property as such.

https://www.ato.gov.au/Individuals/Capital-gains-tax/Property-and-capital-gains-tax/Your-main-residence-(home)/Eligibility-for-main-residence-exemption/

Engaging an accountant will pay for itself on this one.

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    the answer would be better if you quoted from the link. Because if the link dies, the answer would still be useful. Commented Dec 27, 2022 at 11:38
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    Nah. The link is to the tax office. If the rules change the info in the link gets updated. A copy will most likely not reflect current tax laws as they change over time. Commented Dec 27, 2022 at 12:14
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    $400k is NOT the amount on which you'd pay Capital Gains Tax. Your $200k investment was made in "1999 Dollars", and that figure has to have 23 years worth of inflation added to it before anyone can compare it to your 2022/2023 sale price to determine if you've made a capital gain or not. If you made any further investment in the property (renovations, extensions, etc) then that needs to be recognised in the Cost Base as well. I suspect that you will make a substantial Capital Gain and have to pay CGT, but it won't be on $400k. Do your ATO research, or engage an accountant, as suggested. Commented Dec 28, 2022 at 5:30

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