Selling an investment property: the tax questions to resolve before signing

Check the contract timing early

For a property disposal under an ordinary sale contract, the ATO generally uses the date the contract is entered into for CGT timing, rather than the settlement date. Disclose the actual transaction and any unusual conditions to your adviser.

This matters when a contract and settlement fall in different income years. Ask about timing before signing instead of assuming that receiving the money determines the tax year.

Source: ATO: real estate and CGT event timing.

Prepare the property’s history

Build a dated timeline covering purchase, occupation, rental periods, major works and changes in ownership. Include any period when only part of the property was rented. Mark uncertain dates so they can be checked against documents.

A clear timeline helps your accountant identify the questions requiring analysis. It does not establish an exemption, discount or final tax liability by itself.

Separate sale proceeds from the amount available to spend

Prepare a settlement cash estimate with your conveyancer or solicitor. List the expected sale price, amounts needed to discharge loans, selling costs and other adjustments. Separately ask your accountant what provision may be needed for tax and when the estimate can be refined.

For example, an intended deposit on your next purchase may depend on the cash released from this sale. Make that dependency explicit before treating the gross sale price as available funds.

Give your adviser the evidence

• Purchase and proposed sale contracts.
• Settlement statements and acquisition-cost records.
• Invoices for works and improvements.
• Past depreciation or capital works schedules, if any.
• Occupation and rental history.
• Current ownership details and relevant changes in residency.

Ask which missing documents are material to the calculation. Keep the assumptions behind any estimate in writing so you can see what would change the result.

Make the sale part of the next decision

Explain why you are selling: funding another property, reducing commitments, changing your business position or simplifying your holdings. That context helps identify the further work needed and the order in which decisions should be made.

If several properties are involved, start with the portfolio review checklist. Explore property tax advice for a consultation focused on the transaction ahead. A tailored calculation is needed before relying on a tax estimate.