I bought a house in Woollongong three and a half months ago. I've been living there all this time, and it's the only property I own. I bought it to live in.

Due to personal circumstances I've now sold it for a profit. Settlement date is in 2 weeks.

Someone has just mentioned to me that I will have to pay capital gains tax on the profit, even though it was my only place of residence. They said I must have lived there for at least one year in order to avoid capital gains tax. I've searched the internet and I can't find any mention of this "one year" rule. I think it may have been an old rule from days gone by, but I'm not absolutely sure about that.

Does anyone know for sure whether or not this "one year" rule applies to my circumstances? Thank you.

My suggestion.. ask your tax agent.

I am not an expert in CGT but if you were living in it and presumably were not claiming any tax deductibility for any mortgage interest you might have paid or the costs of purchse (stamp duty, legal fees etc), your house should qualify as a "principle residence" and thus be exempt from CGT.

However, I repeat, I am not an expert in CGT and your question should be addressed to your tax agent.

If your tax agent tells you that you do have a CGT liability, at least you cshould be able to claim the costs of buying and selling as cost offsets against the gain.

You are supposed to live there for a year, as the intention is to prevent the tax exemption being abused for profit.

However, someone I know had sold their house due to their partner dying after a few months, and were given exemption. I can't quote the law, it has flexibility.

If this is the third house in 2 years you might get less sympathy.

Shadow M, I've looked on the internet and also all over the ATO website, and I can find no reference anywhere about having to live in the house for at least one year. This makes me think that maybe this was an old law that's since been changed. Does anyone know for sure? Thank you for the replies.

As Cj says, a tax agent is your best bet. Alternatively, you can call the tax office themselves and they would give you an answer.

Having said this I do think there are exceptions to the '1 year rule', although I thought it was in fact 6 months (QLD that is) but it would depend on your circumstances and whether or not you have done this before.

contimued
the date is from when the contract is signed, not the date the property settles. (again, QLD)