Capital Gains Tax Break Could Net You $150,000 – Don’t Miss This Aussie Loophole

Capital Gains Tax Break Could Net You $150,000: Capital Gains Tax (CGT) in Australia is one of the most significant considerations when selling an asset such as a property, shares, or even cryptocurrency. However, what many Australians don’t realise is that through legitimate strategies and legal exemptions, you could save thousands—up to $150,000 or more. This article explores a major capital gains tax break that could benefit homeowners, investors, and small business owners. Whether you’re selling your family home, offloading shares, or exiting a business, knowing how CGT works—and how to reduce it—can drastically impact your financial outcome. Let’s break down the tax, the exemptions, and the steps you can take to legally minimise your liability.

Capital Gains Tax Break Could Net You $150,000

Capital Gains Tax doesn’t have to be a financial blow. With smart planning, you can legally reduce or eliminate it, potentially saving thousands—or even hundreds of thousands—of dollars. Whether you’re selling your home, managing a crypto portfolio, or exiting a business, understanding your CGT obligations and opportunities can give you the upper hand.

What Is Capital Gains Tax (CGT)?

Capital Gains Tax is the tax you pay on the profit (or “gain”) made when you sell an asset for more than you paid for it. In Australia, CGT is not a separate tax; it’s part of your income tax.

For example, if you bought a property for $600,000 and sold it for $850,000, your capital gain is $250,000. Depending on your circumstances, some or all of this gain might be exempt, discounted, or fully taxable.

What Triggers CGT?

CGT applies to disposals of assets, which include:

• Selling a property
• Selling shares, ETFs or managed funds
• Converting crypto into AUD or other assets
• Gifting property or assets
• Losing or destroying an asset

This means even if you give away property, the ATO may deem it a taxable event. If you’re not aware of the trigger points, you could face a surprise tax bill.

The Main Residence Exemption

The biggest CGT break in Australia is the main residence exemption. If you live in a property and treat it as your primary home, you’re generally exempt from CGT when selling.

What qualifies as a main residence?

• You and your family live there
• Your personal belongings are there
• It’s your registered address on the electoral roll
• Utilities and mail are addressed there

The Six-Year Rule

If you move out and rent the property, you can still claim the exemption for up to six years, as long as you don’t designate another property as your main residence during that time.

Example: Kate bought her Sydney home in 2015 and lived in it until 2020. She then moved overseas and rented the property. In 2025, she sells it. Because she didn’t treat any other property as her main residence, she qualifies for a full CGT exemption under the six-year rule.

The 50% CGT Discount

For individuals (not companies), if you own an asset for more than 12 months, you may receive a 50% discount on the capital gain. This is massive—it effectively halves the tax you pay.

Example: Josh buys ASX shares for $20,000. Two years later, he sells them for $50,000. His capital gain is $30,000. Thanks to the 50% discount, only $15,000 is taxable.

CGT Concessions for Small Business Owners

The ATO offers generous concessions for eligible small businesses, which can result in full CGT relief under specific conditions.

The Four Main Concessions:

1. 15-Year Exemption: If you’ve owned your business for 15 years and are retiring, the entire capital gain may be tax-free.
2. 50% Active Asset Reduction: You can reduce the gain by another 50% on business assets.
3. Retirement Exemption: Up to $500,000 of capital gains can be exempt if used for retirement (even if you’re under 55, if paid into a super fund).
4. Rollover Relief: Allows you to defer CGT by reinvesting into a new business asset within 2 years.

These can be combined, resulting in zero CGT in many cases.

CGT on Shares and Crypto

Shares and cryptocurrencies are considered CGT assets by the ATO.

• Holding them for over 12 months may qualify for the 50% discount.
• You must report every sale or conversion, even between two cryptocurrencies.
• Losses can be used to offset gains in the same financial year or carried forward.

Use Your Super to Reduce Capital Gains Tax Break

If you’re selling an asset and expecting a large gain, consider contributing to your super.

• Concessional contributions are taxed at just 15%
• You can carry forward unused caps for up to 5 years
• Certain small business concessions allow CGT proceeds to be paid directly into super without affecting the cap

This strategy is perfect for those approaching retirement or planning their exit strategy.

Practical Guide: Steps to Reduce Your CGT

1. Hold for 12+ Months – To qualify for the 50% discount.
2. Use Your Main Residence Exemption – Don’t miss out on this if you lived in the property.
3. Apply the Six-Year Rule – Rent out your home without losing the CGT exemption.
4. Time Asset Sales Strategically – Sell in years with lower income to stay in lower tax brackets.
5. Claim Costs – Include legal fees, stamp duty, and improvement costs in your cost base.
6. Offset with Losses – Sell underperforming assets to offset gains.
7. Get Professional Advice – Tax laws change often. Work with a qualified accountant or financial planner.

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Frequently Asked Questions (FAQs)

Q: How much CGT do I pay when I sell my house?
A: If it was your main residence, you might pay no CGT at all. If it was an investment, your CGT depends on your gain, holding period, and income tax rate.

Q: Do I pay CGT on inherited property?
A: Yes, when you eventually sell it, CGT is calculated from the date of death value, unless the property was the deceased’s main residence and you sell it within 2 years.

Q: Is cryptocurrency taxed as CGT or income?
A: Usually CGT, unless you’re trading frequently as a business, in which case it may be assessed as income.

Q: Can I avoid CGT altogether?
A: Some strategies like the main residence exemption, small business 15-year rule, or superannuation rollovers can legally result in paying no CGT.