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Australia Mortgage & Home Ownership Tax Guide

Australian tax rules for home ownership and mortgages. The guide covers: the mortgage interest on the owner-occupied home — the 'mortgage interest' on the 'owner-occupied home' (the 'principal place of residence') is NOT 'deductible' under the 'Section 8-1 of the ITAA 1997' — the 'interest is not incurred for the income-producing purpose' (the 'private or domestic nature'); the 'mortgage interest' on the 'rental property' (the 'investment property') is 'deductible' as the 'rental expense'; the 'mortgage interest' on the 'mixed-use loan' (the 'loan that is partly for the home and partly for the investment') must be 'apportioned' — the 'interest on the investment portion' is 'deductible' and the 'interest on the private portion' is NOT 'deductible'; the first home buyer schemes — the 'first home buyer' may be eligible for: (i) the 'First Home Owner Grant (FHOG)' — the 'state government grant of up to $10,000 to $30,000' for the 'first home buyers' (the 'grant for the new homes' in the 'NSW', the 'VIC', the 'QLD', the 'WA', the 'SA', the 'TAS', the 'ACT', and the 'NT'), (ii) the 'First Home Super Saver Scheme (FHSSS)' — the 'withdrawal of the super contributions for the first home' (up to $50,000 total), (iii) the 'stamp duty concessions' — the 'NSW first home buyer exemption' (the 'full exemption for the homes below $650,000' and the 'concessional rate for the homes up to $800,000'), the 'VIC first home buyer exemption' (the 'full exemption for the homes below $600,000' and the 'concessional rate for the homes up to $750,000'), the 'QLD first home buyer concession' (the 'full exemption for the homes below $500,000'); the main residence CGT exemption — the 'main residence' (the 'principal place of residence') is 'exempt from the CGT' under the 'Section 118-110 of the ITAA 1997' (the 'main residence CGT exemption'); the 'main residence exemption' applies to the 'dwelling that is the 'owner's primary home' — the 'land up to 2 hectares' (the 'curtilage' exemption); the '6-year absence rule' — the 'owner can treat the property as the 'main residence' for the 'CGT purposes' for up to 6 years if the 'property is rented out' and the 'owner is NOT living in the property' (the 'absence from the main residence' — the 'temporary absence rule'); the '6-year rule' is available once the 'property was the 'main residence' before the 'absence'; the stamp duty and the home ownership — the 'stamp duty (the transfer duty)' is 'payable on the purchase of the home' — the 'duty rates' vary by the 'state' (the 'NSW duty' from 0% to 7%, the 'VIC duty' from 1.4% to 5.5%); the 'first home buyer stamp duty concessions' are available in the 'NSW', the 'VIC', the 'QLD', the 'WA', the 'SA', the 'TAS', the 'ACT', and the 'NT'.

Mortgage Interest Deductibility

  • Owner-occupied home: The 'mortgage interest' on the 'home loan for the principal residence' is NOT 'deductible'.
  • Investment property: The 'mortgage interest' on the 'rental property loan' is 'deductible' as the 'rental expense'.
  • Mixed-use loan: The 'interest on the loan for the mixed purposes' must be 'apportioned' (the 'investment portion is deductible').

For the rental property expenses and the investment property deductions, see our Rental Property Expenses Guide →.

First Home Buyer Schemes

  • First Home Owner Grant (FHOG): The 'state grant of up to $10,000 to $30,000 for the new homes'. The 'eligibility' varies by the 'state'.
  • FHSSS: The 'withdrawal of the voluntary super contributions' for the 'first home purchase' — up to '$15,000 per year' and '$50,000 total'.
  • Stamp duty concessions: The 'first home buyers' may be 'exempt from the stamp duty' or 'eligible for the concessional rate' — the 'thresholds vary by the state'.

For the FHSSS rules and the super withdrawal, see our First Home Super Saver Scheme Guide →.

Main Residence CGT Exemption

  • Full exemption: The 'capital gain on the sale of the principal residence' is 'exempt from the CGT' under the 'Section 118-110'.
  • 6-year absence rule: The 'owner can rent out the property for up to 6 years and still claim the 'main residence exemption' on the 'sale'.

For the CGT on the property and the 6-year rule, see our Property Tax Guide →.