If we’re not renting out our holiday home, do we still pay tax?

My husband and I purchased a holiday home 14 years ago. We used it ourselves and also rented it out through a holiday letting agent until 2022. During that time, and since then, we have carried out substantial renovations. Our main residence remains in Brisbane, although we divide our time between the two properties.

A friend told me that capital gains tax (CGT) only applies when you are receiving rental income. Does that mean CGT would not apply for the period since we stopped renting it out? Also, does the fact that it was rented for only about 90 days a year affect the CGT outcome?

The information you were given is incorrect. You’ll need to work with your accountant on this one because the capital gains tax will be apportioned between the periods when the property was used privately and when it was producing rental income.

If there were times when it was available for rent but not actually rented, or periods when it was neither rented nor available for rent, that may also affect the calculation. The fact that it was rented for only about 90 days a year does not, by itself, determine the outcome. I hope you’ve been keeping good records.

My spouse and I are self-funded retirees in our mid-60s. We own our home and a modest 1970s villa unit that we bought outright five years ago for $325,000. We have since renovated it, and before the budget believed it was worth about $425,000, although it now appears many investors are selling. The unit is rented to an excellent tenant for $430 a week, who has just signed a further 12-month lease. Our income comes from our super pensions, the rent and interest on bank deposits. Since retiring six years ago, we have paid no income tax because our taxable income has remained below the tax-free threshold.

My husband is reluctant to sell because the unit could provide a useful stopgap home if we sell our house before moving into a retirement village. We have seen too many people commit to a retirement village before selling their home and end up under unnecessary financial stress. Under the proposed capital gains tax changes, if we eventually sell the unit after June 30, 2027, would we still be able to use our individual tax-free thresholds to offset the capital gain, or would the proposed 30 per cent minimum tax apply regardless of our low taxable income?

If you sign a contract before June 30, 2027, the entire capital gain will be taxed under the existing rules. If the contract is signed after that date, the gain will effectively be split into two periods.

The portion that accrued up to June 30, 2027 will retain the