Selling your home can be a rewarding milestone, especially when done independently through platforms like For Sale By Home Owner. However, one important aspect that many private sellers overlook is the need for proper recordkeeping for CGT (Capital Gains Tax). Whether you're selling an investment property or a home that hasn’t always been your primary residence, accurate records are essential. They play a major role in calculating any capital gains you may owe and ensuring a smooth tax reporting process.
What Is Capital Gains Tax (CGT)?
Capital Gains Tax is a tax on the profit you make when you sell an asset, including real estate. While your main residence is usually exempt from CGT, certain conditions may trigger a partial or full CGT liability — especially if the property was rented out, used to run a business, or held as an investment.
Understanding CGT on home sales begins with knowing your property’s ownership history and how it was used. If you’ve lived in the property part-time, made improvements, or rented it out for any duration, you’ll likely need to report a capital gain or loss when you sell.
That’s where good recordkeeping becomes essential.
What Does Recordkeeping for CGT Involve?
Recordkeeping for CGT means maintaining all documents and records that show how much you paid for the property, what you spent improving it, and how much you sold it for. These records allow you — or your tax agent — to calculate the gain or loss when you sell your property.
The types of documents you need to keep include:
- Purchase records: Contracts, settlement statements, and legal fees related to the original purchase.
- Sale records: Contracts of sale, agent or FSBO fees (such as those from For Sale By Home Owner), marketing costs, and conveyancing fees.
- Improvement and renovation records: Invoices, receipts, and council approvals for extensions, remodeling, or structural upgrades.
- Occupancy details: Dates the property was your main residence, when it was rented out, and any periods it was vacant.
In Australia, the ATO requires you to keep these records for at least five years after the CGT event (the sale of the property).
Why Is Recordkeeping So Important?
Without accurate and complete documentation, you may find yourself paying more tax than necessary — or worse, facing penalties for incorrect reporting. Here’s why recordkeeping for CGT is so important:
- Accurate CGT Calculation
- To determine your capital gain, you need to know the cost base (what you paid plus eligible expenses) and the sale price. The more deductions you can support with receipts and documents, the lower your capital gain will be.
- Claiming the Right Discounts
- If you’ve owned the property for more than 12 months, you may be eligible for a 50% CGT discount. Good recordkeeping helps prove your eligibility for this and other tax benefits.
- Supporting Partial Main Residence Exemptions
- If your home was only your main residence for part of the ownership period, you may qualify for a partial exemption. To apply this correctly, you need to document your periods of occupancy and usage clearly.
- Minimising Audit Risk
- If the ATO ever audits your tax return, proper documentation will support your claims and keep you compliant. It shows that you’ve taken reasonable steps to report your capital gain (or loss) accurately.
A Smart Step for FSBO Sellers
If you’re managing your own sale using For Sale By Home Owner, you already know the value of staying organised. Handling your sale independently means taking on responsibilities that agents usually manage — and tax compliance is a big one. By focusing on understanding CGT on home sales and maintaining thorough records, you protect your financial interests and avoid unnecessary complications later on.
Recordkeeping for CGT may sound tedious, but it’s a crucial part of the selling process — especially for private sellers. When you list with For Sale By Home Owner, you take full control of your sale, and that includes preparing for tax time. By keeping detailed, accurate records from the start, you ensure your experience is not only smooth but also financially sound.
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