Selling a property in Australia can lead to a significant financial gain, but it also comes with tax responsibilities. One key consideration is capital gains tax on real estate. Whether you’re selling your home through an agent or as a private seller, you must understand how capital gains tax (CGT) works and how it affects your sale proceeds. At For Sale By Home Owner, we help private sellers take charge of their property sale — and that includes understanding important tax implications like CGT.

What Is Capital Gains Tax on Real Estate?

Capital gains tax on real estate is the tax you pay on the profit you make when selling an investment property or a secondary residence. If you bought a property and later sold it for a higher price, the difference — known as a capital gain — is considered taxable income. CGT applies to real estate that isn’t your main residence, such as rental properties, vacant land, holiday homes, or inherited property in some cases.

For example, if you purchased a unit for $500,000 and sold it for $700,000, your capital gain would be $200,000. This amount may be subject to tax depending on several factors.

Do You Always Have to Pay CGT?

The good news is, not all property sales attract capital gains tax. If the property was your main residence for the entire time you owned it, you may be eligible for a full exemption. However, if you rented it out for any period or used it for business, partial CGT could apply. You might also need to pay CGT if the property was an investment from the beginning.

This is where understanding your FSBO tax responsibilities becomes essential. When selling your property privately without an agent, you remain responsible for managing the tax aspects, including CGT. For Sale By Home Owner provides resources to help sellers stay informed and prepared.

How Is Capital Gains Tax Calculated?

The Australian Taxation Office (ATO) uses a straightforward formula to calculate CGT:

Capital Gain = Selling Price – (Purchase Price + Eligible Costs)

Eligible costs can include:

Stamp duty on purchase Legal and conveyancing fees Advertising and marketing expenses Renovation and improvement costs (not maintenance) Agent fees (if any), or listing fees if you used an FSBO platform

Once you determine your capital gain, it gets added to your taxable income for the year and taxed at your marginal tax rate. If you owned the property for more than 12 months, you might be eligible for a 50% CGT discount. That means you’d only pay tax on half of your capital gain.

FSBO Tax Responsibilities: What You Need to Know

Selling your property through For Sale By Home Owner gives you greater control, but also means you must stay on top of your FSBO tax responsibilities. This includes:

Keeping clear and complete records of your purchase, sale, and improvement expenses Consulting a tax professional to determine your exact CGT liability Reporting the capital gain in your tax return for the relevant financial year

Even if you qualify for a CGT exemption or discount, it’s still crucial to report the sale correctly.

How For Sale By Home Owner Helps

At For Sale By Home Owner, we make the selling process easy and transparent. While we don’t provide tax advice, we encourage our clients to stay informed about their capital gains tax on real estate. By managing the sale directly, private sellers often save on commissions and gain a clearer understanding of the financial side of the transaction.

We also recommend working closely with a qualified accountant or tax agent to ensure you meet your CGT obligations, especially when handling an FSBO sale.