With the dramatic increase in the value of the family home, the capital gains tax (CGT) main residence exemption is more important than ever. Imagine selling your home and not having enough to buy another one after paying CGT.
The main residence exemption is not a given as one family found out when the tax office successfully argued that their electricity bill was too low for them to be actually living there.
If you think you might have fallen for one of these traps, make sure you’ve kept good records of all your expenses.Credit: AFR
In that 2007 case, the Administrative Appeals Tribunal ruled that the family spent most of their time at their daughter’s place, so they could not cover their home with their main residence exemption.
Here are just a few traps that could cost you thousands in CGT:
Name not on the title: It might be held in a trust or company name or maybe your parent’s name, but they don’t live there. Unless it can be........