Do I need to pay capital gains tax on the sale of my home?
The bright line tax property rule says you’ll pay tax when you buy and sell a residential property unless the home you are selling, is your main home.
It's important to note that for need to have used a property as your main home for 50% or more of the time that you’ve owned it and used 50% of the area of the property as your main home. For example, if you use 40% of a property as your home and 60% as a rental property, you can’t use the main home exception.
Another important note to make is that you can't use the main home exception more than twice over any two-year period.
This includes if the property is located overseas.
If the home is held in a trust, the main home exception can still apply if the house sold was the main home of the principal settlor of the trust (the person who has made the biggest financial contribution to the trust), or the principal settlor didn’t have a main home, and it was the main home of a beneficiary of the trust.he bright-line rule does not apply if you sell a property you inherited.
The bright line tax rule does not apply if you inherit a home
So, if the residential home you're selling is not your main home and you bought it from the 1 October 2015 to 28 March 2018, inclusive: the two year bright-line rule applies.
If you bought the property on or after 29 March 2018: the five year bright-line rule applies.
But whenever you buy a property intending to resell it, you’ll need to pay tax on any profit you make when you sell that property.
Before you pay the income tax you owe on your property sale, you’ll need to complete an income tax return. You’ll generally include the amount of property income you’ve earned in the “other income” box on your return.
You’ll also complete an IR833 Property Sale Information form and submit this along with your income tax return.