Home ownership is considered to be part of the great Australian dream, and the 'primary residence' is one investment the ATO allows you to escape from the clutches of Capital Gains Tax (CGT).
Expenses incurred in maintaining your primary residence are often included as deductions in individual's tax returns. When does the deduction go too far? The 'tax free' status of the primary residence can be impacted!
Caution needs to be exercised for those who claim deductions in relation to their primary residence including:
- Taxpayers who claim deductions for home office expenses
- Taxpayers who rent out all or part of their residence (which is increasingly popular now with Airbnb)
- Taxpayers running a home based business
If certain deductions are claimed, such as a portion of you home loan interest you may be surprised to find you could be subject to CGT on the sale of your residence.
Best to seek advice from those in the know!