How does selling commercial property affect your tax liability?

By Greg Bell

If you already own some commercial real estate and are thinking about selling it, you might not be too certain of how doing so will affect your tax liability. It's not necessarily as complicated as you might think, but you will still need to prepare yourself for the financial changes that accompany such a transaction.

First and foremost, you need to understand that you will almost certainly have to pay capital gains tax on the sale, according to However, the amount you have to pay on this front can vary widely, particularly based on whether you own the property as an individual or through a business entity.

Breaking it down

Generally speaking, if you own a commercial property as an individual, you will be able to claim some tax discounts on the sale, meaning that you end up paying less in taxes. However, there are also small business concessions that could reduce your liability even more significantly, so that you effectively cancel out the gains on which you have to pay any taxes at all.

Also, if the building is unoccupied without a leasing agreement in place, you as the seller will have to pay goods and services tax above and beyond the purchase price. 

Brief exceptions

As you are no doubt aware, the Australian tax code can be more than a bit complicated, and when it comes to paying capital gains tax, the ATO notes there are some exceptions. For instance, if you bought the property you are now selling before the CGT was put into place (20 September 1985), you do not have to account for capital gains or losses on your tax bill.

However, if you made any updates or additions to the property after that date 35 years ago, those changes are subject to CGT rules.

To get a better handle on all the ins and outs of the commercial real estate sales process — from either side of the transaction — you need an experienced professional by your side. Whether you're looking to buy or sell, the experts at Ray White Surfers Paradise are here for you, ready to answer any questions you might have at any step of the process. Get in touch with us today to learn more about how we can help guide you through a sale.

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