Are you in the business of renovating properties?

Are you entitled to an exemption from tax?

If you are a personal investor, you may be entitled to an exemption from capital gains tax. One of the most common exemptions is the main residence exemption.

If the property had a dwelling which you occupied as your home (main residence), a full main residence exemption is likely to apply if the dwelling:

• is your home for the full period you own it (ownership period), and
• has not been used to produce assessable income - for example, a business is run from it or it is rented out, and
• is on land that is not more than two hectares (approx. 4.9 acres).

If these conditions apply only partly to your property, a partial exemption may apply.

The capital gains tax property exemption tool can help you work out your proportion of main residence exemption.

Example

Personal investor entitled to an exemption from tax

Mary is an advertising executive. She buys a run-down property that is located close to her workplace and moves in straight away. Over the following few years she has a new kitchen and bathroom put in, an internal wall removed to create more space and paints the house inside and out.

Due to a work transfer, Mary sells her home. Although Mary is a personal investor, she has lived in the property for the entire time she owned it, she has not used it to produce assessable income, and the land area is less than two hectares. Therefore, she is entitled to the main residence exemption from capital gains tax.