House Flipping in Sydney: Finance, Tax and the Real Costs

House flipping, buying a property to renovate and sell for a profit, is usually taxed as ordinary income, not a capital gain, so the 50% discount and main residence exemption do not apply to that profit. Flips are financed with an investment loan, a renovation or construction loan for major work, or short-term finance, and the numbers must include duty, holding costs and selling costs.

How does the ATO tax a flip?

The ATO says that if you buy a property intending to renovate and sell it at a profit, in a business-like way, you are likely to be carrying on a profit-making activity. The net profit, after the costs of buying, holding, renovating and selling, goes into your tax return as income, and the CGT discount and main residence exemption do not reduce it. If you are in the business of renovating, the properties are trading stock, and you may need to register for GST if the renovations are substantial. Speak to your accountant before you start.

How are flips financed?

• An investment loan for the purchase, with savings or equity for the deposit.
• A renovation or construction loan for larger structural work, paid in stages; see renovation loans.
• Equity from another property for the works.
• Short-term finance when speed matters or a bank will not lend; see short-term property finance.

What do lenders look at?

Lenders assess you, not the profit. They check you can service the loan on your income, and value the property as it is when you buy. Some will consider a valuation on completion for a construction loan, but most will not lend on the expected sale price. If your plan relies on selling quickly, lenders want to see it is realistic, especially for short-term loans.

What does a flip really cost?

Duty is the cost most people underestimate. On a $1,000,000 Sydney purchase, transfer duty for an investor is about $39,187 before any renovation, and the buyer of the finished home pays duty again on their purchase. Add interest at the 6% example rate on a $800,000 loan, about $4,000 a month, for every month the work takes, plus rates, insurance, agent fees and the tax on the profit. The buying cost calculator totals the purchase costs.

What about living in it while you renovate?

If you genuinely live in a home as your main residence and later sell, the main residence exemption may apply. But repeated buy, renovate and sell cycles can be treated as a profit-making activity even if you lived there. The ATO looks at your intention and pattern, so get advice first.

A worked example

An investor buys a dated house in the Inner West for $1,000,000, spends $150,000 on a renovation over six months, and sells for $1,350,000. Duty was about $39,187, interest about $24,000, and selling costs about $25,000. The profit before tax is about $112,000, which is taxed as income at the investor’s marginal rate rather than as a discounted capital gain.

Questions people ask

Do you pay capital gains tax on flipping houses?

Usually the profit is taxed as ordinary income instead, without the 50% discount, when you bought to renovate and sell.

Can I get a loan to flip a house?

Yes, usually an investment loan plus a renovation loan or equity. Lenders assess your income, not the expected profit.

Is house flipping profitable in Sydney?

It can be, but duty, holding costs and tax take a large share. Work out the numbers before buying.

Charles Touma structures purchase and renovation finance so the works are funded without stalling. A free 30-minute call covers it. General information only, not tax or credit advice. Example figures use the 6% example rate.

Sources: ATO, renovating properties and tax; ATO, understanding property sales, checked 18 October 2026.

General information only, not credit, legal or tax advice. Your situation is assessed properly before any recommendation. Government scheme details change; figures are current at the time of writing.