Thinking of rebuilding your home? Don’t fall for this costly tax trap

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If you are considering a knock-down rebuild of your own home, don’t do anything until after July 1, 2027. That is right – as a result of Labor’s poorly drafted new taxation legislation, you should halt any activity of this kind until then.

Central to this issue is the forced calculation of a CGT event as at July 1, 2027 thanks to the switchover to the new rules. On top of this, the main residence CGT exemption must apply to a dwelling – the land only comes along for the ride.

If there is no dwelling on your land at July 1 next year, there is no main residence exemption for any of the capital gain made on the property up to that date.

Even if you have lived in the existing home for 30 years, if your rebuild process means there will be no dwelling on the land at July 1, that 30 years of main residence exemption is lost.

This has not........

© Brisbane Times