From a conveyancing perspective, the choice of ‘should sell my investment property‘ involves weighing up many factors, including capital gains tax considerations, tenancy agreements, and your personal circumstances.
1. Should I sell my investment property if Capital Gains Tax applies?
Selling an investment property in Australia will usually trigger a Capital Gains Tax (‘CGT‘) event, as the property is not your principal place of residence.
The CGT payable depends on factors such as:
- How long you have owned the property
- The purchase and sale price
- Your ownership structure
- Your marginal tax rate (%)
Ensure you have considered these factors prior to getting your house ready for sale.
CGT 12-month discount
You may be eligible for a 50% CGT discount if:
- You owned the property for at least 12 months, and
- You are an Australian resident for tax purposes
Different rules apply depending on the entity that owns the property. A conveyancer can identify issues early, but you can always seek advice from a tax accountant or tax lawyer before selling, especially if you are a high net-worth individual.
There are several exceptions that can change according to ATO rules. Please consult the ATO for further information.
How ownership structure affects selling an investment property
Investment properties may be held under various ownership structures, including:
- Individuals (either as sole proprietor, joint tenants or tenants in common)
- Corporations and/or their Corporate Trustees
- Self-Managed Superannuation Funds (SMSFs)
- Inherited property from a deceased estate
Each structure attracts different tax treatment and legal considerations on sale.
From a conveyancing perspective, the ownership structure determines how the transfer is documented and who must sign. Professional advice is essential before entering into a contract of sale.
2. Can I sell with tenants currently in place?
Yes, as a landlord, you can sell an investment property that is subject to a residential tenancy agreement.
However, it is important to note that generally;
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The lease runs with the land, after settlement unless legally terminated
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Tenants may have rights to remain for the duration of the lease
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Notice requirements must comply with Victorian tenancy laws
If vacant possession is required, your leasing agent may need to issue a Notice to Vacate in accordance with the Residential Tenancies Act 1997 (Vic). Incorrect notice can delay settlement or expose you to unforeseen risks. For current requirements, please consult the Consumer Affairs Victoria website.
3. When is the right time to sell an investment property?
There is no single “right” time. Common reasons property owners sell include:
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Relationship or marriage breakdown
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Financial pressure
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Business restructuring
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Estate planning considerations
At Conveyancing Excellence, we can guide you through the legal process of sale, ensure compliance, and coordinate with your mortgage broker, bank and real estate agent to avoid costly mistakes.