How soon can I sell my house after purchase in Australia?

When purchasing a property, the last thing on most buyers' minds is selling. However, life can be unpredictable, and circumstances may arise that necessitate selling your new home sooner than expected. 

If you find yourself in this situation, you're probably asking the question: "How soon can you sell a house after buying?" In this article, we will explore the rules, considerations and implications surrounding selling a recently purchased property in Australia. 

How soon can I sell my house after purchase in Australia?

In Australia, there are no specific restrictions on how soon you can sell your house after purchasing it. Once the property is officially in your name and the settlement process is complete, you have the right to sell it at any time. 

However, selling your property right away may not be the wisest decision as you should firstly consider several practical and financial factors when deciding how soon to sell your house after purchase. 

Selling your house before 1 year 

Selling a house is a significant decision that requires careful thought and consideration. While circumstances may arise that necessitate selling a property soon after purchase, it's important to approach this decision with caution.

In Australia, selling within one year of purchase can have multiple implications and considerations that should be taken into account. Some of the considerations to keep in mind include:

Capital gains tax (CGT)

Capital Gains Tax is a tax levied on the profit made from selling an asset, including property. While you can avoid paying CGT by having the home as a principal place of residence (PPOR), this requires the property to be held for at least a year. Selling your house within 12 months of purchase therefore leaves you subject to CGT no matter what. 

If you are selling and have held the property for less than 12 months, you will be taxed on 100% of the capital gain using your income tax rate. However, if you have held the property as an investment for more than a year, only 50% of your capital gain is susceptible to capital gains tax. 

Limited return on investment

If you sell a property within a year, you may not have enough time to realise a significant return on your investment, let alone any return at all. Considering CoreLogic’s estimate of Australia’s 5.4% average annual property value growth rate, selling the property in under a year may not allow you to take full advantage of the compounding effect of the investment. 

Furthermore, the costs associated with the purchase and sale of the property, including fees, taxes, and commissions, may eat into any potential gains, making the experience less financially rewarding.

Time and effort 

Selling a house involves significant time and effort, including property preparation, marketing, negotiations, and completing legal processes. Selling within a year means going through these procedures again relatively soon, which may not be ideal if you prefer a more stable and less demanding real estate experience.

Selling your house within a year may also disrupt your established routine and  familiar environment which can be emotionally-taxing.

When should you sell your house soon after purchase? 

While many homeowners prefer a traditional sales process, circumstances may arise where selling your home relatively quickly becomes a priority. Whether driven by financial needs, life changes, or market opportunities, a swift sale can offer numerous advantages.

Selling your home relatively quickly can be favourable in certain situations including:

Financial Hardship

If you are facing financial difficulties, such as mounting debts, job loss, or unexpected expenses, selling your home quickly can provide the funds needed to address these challenges and avoid further financial strain.

If you also find that holding onto the property is too financially burdensome through expenses such as property taxes, insurance costs and strata/maintenance fees, it may make sense to sell.

Market Opportunities

In certain cases, there may be favourable market conditions that make it an opportune time to sell quickly. This could include a seller's market, where demand exceeds supply, creating an environment where properties sell rapidly and at potentially higher prices.

You may also look to sell to put your capital elsewhere, including more lucrative investment opportunities or other markets. 

Significant home Improvements 

If you’ve made some considerable improvements and changes to your property, it might make sense to sell in under 12 months in order to make some quick gains. 

Selling soon after home renovations and improvements can allow you to recoup your investment sooner, maximise market appeal, and avoid potential depreciation or changing market trends.