So...when exactly does capital gains tax kick in?

There’s no doubt property investment is one of the most popular wealth-building strategies for Australian families. There are plenty of benefits to the strategy, and also a few traps to be aware of.

We’ve spoken before about the capital gains tax implications of selling an investment, which you go can check out on our YouTube channel or LinkedIn.

But one thing we’ve come across with clients recently is the question of when the CGT kicks-in.

For example, say you sold your investment property in May on a 60-day settlement. You might think that the CGT and other tax implications kick-in upon settlement in the new financial year. However, that’s not the case, with the tax event taking place upon signing of contracts rather than settlement.

Another question we hear often is whether capital gains tax can be rolled over to the purchase of a new investment, which unfortunately it can’t. If you sell a rental property and make a capital gain, a 50% discount can apply if you are an Australian resident for tax and have held the property for more than 12 months.

So be mindful, the tax event on sale of an investment property is the date the contract is executed, and if you realise a capital gain there are no capital gains rollover concessions.

If you have any questions, we’d be happy to help.