[London Kiwi]

I am thinking of buying a property in Adelaide firstly as an investment then maybe to live in myself in a few years – not really sure yet, no firm plans.

Are there any capital gains taxes that I need to be aware of when investing in property in Australia? If I decide to live in the house will I be exempt when I come to sell it?

[Cliff]

My understanding is:

A main home is exempt from capital gains tax, so if you live in the house there will be no CGT to pay on any increase in the purchase price.

If you don't live in the house, but rent it out, AND own it for at least 12 months, then you will pay CGT on 50% of any increase between the sale price and purchase price.

CGT tax rate is based on your marginal income tax rate.

There are lots of pages on the Australian Tax office website on the subject:

http://www.ato.gov.au/individuals/content.asp?doc=/content/00191831.htm&page=32&H32

http://www.ato.gov.au/individuals/content.asp?doc=/content/36899.htm

http://www.ato.gov.au/individuals/content.asp?doc=/content/36520.htm

[quincy]

Also useful is a general rental property advice booklet, also from the ATO

http://www.ato.gov.au/content/downloads/IND00191817n17290609.pdf

[London Kiwi]

Thanks cliff and quincy. I'm not sure from reading these links if there's an annual allowance for capital gains like there is in England. Do you know if there is?

[Cliff]

The capital gain is taxed as extra income (at income tax rates) and there is no separate allowance.