Understand the Tax Implications of Selling Your Home by Working with a Conveyancer in Stirling
Just like buying your home was a substantial investment, selling it will bring a sizeable windfall. In most cases, sellers don’t hold onto this cash for long. Rather, it goes right into the fund to pay for a new home. However, as with any large transaction, it’s important to consider the potential tax implications that selling a home might have. Working with a professional conveyancer in Stirling can help you understand what your tax obligations might be. More importantly, your conveyancer will be able to help you navigate all the paperwork involved in the selling process, thus preparing you for a situation in which your transaction might be subject to taxation.
The Tax Implications of Selling Your Home: What You Need to Know
If you are currently saying ‘I thought selling a home was exempt from taxation,’ know that you are correct—mostly. The Australian Taxation Office (ATO) does not charge capital gains tax (CGT) on homes that qualify as main residences. So, if you are selling a house that you have actually called home, you will likely not be required to pay taxes on the transaction.
However, there are situations in which you might sell a home and be expected to pay CGT on the profits. The most obvious example is that of a vacation home. If you have a second residence or vacation home that you are trying to sell, then you will not be exempted from paying CGT. Primary residences are the only types of dwellings that earn this exemption. If you have a second house—whether as a vacation residence or because you split your time between two different cities throughout the year—you will have to choose which one is your primary residence and which is your secondary residence.
A lesser known technicality relates to homes that are used to produce an income. If you rent out your home to temporary tenants or use your home as an office for your business, then it qualifies as ‘producing an income.’ Homes that fit into this category are also subject to CGT at the time of sale.
Clearly, these tax rules are somewhat complex. Figuring the capital gain or loss for a home used for business purposes is especially difficult, as you need to make your calculations using the market value of the home when you first started using it to produce an income. Working with a Stirling conveyancing professional will help you understand what your obligations are under the tax law.
Count on Adcocks Conveyancing Solutions for Your Stirling Conveyancing Needs
At Adcocks Conveyancing Solutions, we are happy to help you with any needs you may have for conveyancing in Stirling. We’ll work with you to determine your tax obligations (if there are any), as well as help you prepare for those obligations in any way we can. If extra legal or tax advice, or assistance is needed, we can also assist you in finding the right lawyer or tax professional for the task. Finally, once everything is squared away, we can help you execute a seamless transaction, from lodging the necessary paperwork to negotiating with your buyers.
Do you want to chat with our conveyancing team in Stirling? Call us on 08 8267 6255.