Which records to keep for your property so you can work out CGT when you sell it.
Property records you should keep
For your property, you should keep records of:
- your acquisition of the property and related expenses, such as
- purchase contract
- stamp duty
- legal fees
- settlement statement
- survey and valuation fees
- your disposal of the property and related expenses, such as
- the sale contract
- sale settlement statement
- legal fees
- sales commission
- your costs of owning the property, including
- interest
- rates
- land taxes
- insurance premiums
- the cost of repairs
- capital expenditure on improvements, such as
- extensions or additions.
The records for buying, owning and selling the property need to be kept for at least 5 years after you dispose of the property.
If you acquired your property before 20 September 1985, it is exempt from capital gains tax (CGT). You do not need to keep records for CGT purposes unless you later add a capital improvement.
However, you still need to keep records of any property income, such as rent, for income tax purposes.
Main residence
Your main residence – home is generally exempt from CGT. However, you should keep all records in case circumstances change and it is no longer exempt from CGT.
For example, if you start renting out part of your home, you will need records.
Using your main residence to produce income
If you rent out part of your home or run a business from home, it may be subject to CGT.
Keep records of:
- expenses during the time you produced income
- the proportion of the property used to produce income.
If you first use your home to produce income after 20 August 1996, you need a record of your home’s market value at the time you first used it to produce income.
It is best to get a market valuation of your home at the time. However, you can arrange a valuation later if necessary.
Inherited dwellings
If you inherit a dwelling that was the main residence of the person who left it to you, any capital gain when you later dispose of it may be exempt from CGT. The exemption depends on a number of things, such as when you inherit the property and how long you own it before disposing of it.
Until you are sure of the circumstances, you should keep records of:
- relevant costs incurred by you, the previous owner and the trustee or executor
- the market value of the dwelling at the time the deceased died.
If the executor or trustee has a record of a market valuation, get a copy of the valuation report.
Records held by former spouse
If a property transfers to you because of a relationship breakdown, get copies of the property records that show:
- how and when your former spouse acquired the property
- the property’s cost base when they transferred it to you.
If the property was your former spouse’s main residence, get copies of records that show:
- the extent to which they used it to produce income during their ownership period
- the number of days it was their main residence during their ownership period.
You’ll need these records to show how much of your spouse’s ownership period is eligible for the main residence exemption.
If you do not have these records, you may be liable for CGT for periods when the property would have qualified for the exemption.
Source: ato.gov.au June 2024
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/keeping-records-for-property
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