Selling your investment property

Capital gains tax implications

When you sell an investment property, you may need to pay capital gains tax (CGT). This tax applies to the profit you make from the sale, which is the difference between what you paid for the property and what you sell it for, minus certain costs.

If you’ve owned the property for more than 12 months, you might be eligible for a 50% discount on the capital gain. There are also exemptions, like if the property was your main residence for part of the time. It’s important to keep records of all your expenses, including legal fees, agent commissions and improvements, as these can reduce your taxable gain. Understanding CGT can help you plan ahead and avoid surprises.

If you’re thinking about reinvesting in property, knowing your CGT position can also help you decide how much of the sale proceeds you’ll have available to use.

Planning to reinvest?

If you’re selling your investment property with the goal of buying again, it’s important to plan ahead. Reinvesting can help you grow your portfolio but timing and preparation matter.

• Start by reviewing the market. Look at areas with strong rental demand, future growth potential and infrastructure plans. This helps you make informed choices and avoid rushing into a purchase.
• Next, think about your financial position. How much of the sale proceeds will be available after costs and tax? 
• You’ll also want to get your finances ready for the next step. That means checking your borrowing power and getting a home loan pre-approval so you can act quickly when the right property comes up.
• Reinvesting isn’t just about buying again; it’s about making sure your next move fits your long-term goals. You can explore more strategies in how to buy an investment property.

When you’re ready, don’t feel you need to do it alone. Our home loan experts can help you every step of the way.