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Taxing the Family Home

Reading time: 1 - 2 minutes

Its pretty much a standard understanding that you dont get taxed on the sale of your family home; the "main residence exemption" takes care of that.

Recent cases and ATO activity might call that into question though.

So how sure are you that youll withstand a review by the ATO?

The ATO has started to request significant evidence from taxpayers to prove that a property was their main residence for the time they owned it, with the burden of proof being with you the owner.

And keeping the information for long enough can be a challenge.

What could it cost you? In a recent case a taxpayer had his claim for the main residence exemption disallowed because he could not prove that a property was his main residence for the stated period of time. And it cost him on an additional $66,271 of taxable income.

The ATO has developed data-matching capabilities specifically targeting property sales. And theyre using it to good effect (from their point of view).

So, to reduce the chances of triggering an ATO review, the easiest thing to do is to ensure that government data for your home address is up-to date and consistent, especially when you have just moved into a property.

This data would include address changes for driver licence, car registration, electoral roll, as well as for other government contacts such as Medicare and the ATO. Consider also keeping samples of other documents like electricity, water, gas, telephone.

As always with the ATO, theres no guarantees, but dont leave it to chance.


Photo by iAlicante Mediterranean Homes on Unsplash


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