Selling your home
You can generally claim the main residence exemption to ignore a capital gain or capital loss from a CGT event that happens to your home. To get the exemption, the property must have a dwelling on it and you must have lived in the dwelling. If your property is a vacant block of land, you are not entitled to the exemption.
Generally, a dwelling is considered to be your main residence if:
- you and your family live in it
- your personal belongings are in it
- it is the address your mail is delivered to
- it is your address on the electoral roll, and
- services are connected (for example, telephone, gas or electricity).
The main residence exemption is not based on one factor alone, and the weight given to each factor may vary depending on individual circumstances. The length of time you stay there and your intention in occupying it may also be relevant.
In this section you can find out about:
Full exemption
You are likely to be eligible for a full main residence exemption if the dwelling:
- has been the family home for you, your partner and other dependants for the whole period you have owned it (ownership period)
- has not been used to produce assessable income - that is, you have not run a business from it or rented it out, and
- is on land of 2 hectares or less.
If the exemption applies your capital gain or capital loss is disregarded and you don't pay tax on any capital gain you make (but nor can you use the capital loss to reduce your assessable income).
Partial exemption
You may be eligible for a partial main residence exemption if:
- the dwelling was your main residence for only part of the period you owned it
- your partner or dependants have separate homes
- you have used part of the property (either the dwelling or the land) to produce assessable income, or
- the land is more than 2 hectares.
If you are eligible for partial exemption, part of the capital gain or capital loss you make is ignored for tax purposes.
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For more information, refer to:
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Main residence you don't occupy
As a general rule, a dwelling is no longer your main residence once you stop living in it. However, in some cases you can choose to have a dwelling treated as your main residence for CGT purposes even though you no longer live in it.
You only need to make this choice for the income year the CGT event happens to the dwelling - for example, the year you enter into a contract to sell it.
More than one property
Usually you are only entitled to the main residence exemption on one property for any particular period.
If for a period you have two homes that could be regarded as your main residence - such as your home and a holiday home - you must choose one of the homes for this exemption and CGT will apply to the other property. (You don't have to make the choice until you sell one of the homes.)
If you make this choice, you cannot treat any other dwelling as your main residence for that period (except for a limited time if you are moving from one home to another, see Moving from one main residence to another, below).
Moving from one main residence to another
If you acquire a new home before you dispose of your old one, both dwellings are treated as your main residence for an overlap period of up to six months if:
- you lived in your old home and it was your main residence for a continuous period of at least three months in the 12 months before you disposed of it
- you did not use it to produce assessable income (such as rent) in any part of that last 12 months when it was not your new main residence, and
- the new dwelling becomes your main residence.
The overlap period ends at the earlier of six months and when settlement occurs on the contract to sell your old home.
Selling a home you inherited
If you inherit a house that was the main residence of the person who left it to you, any capital gain on its subsequent disposal may be exempt.
Sections within Your home and other real estate
Last Modified: Wednesday, 30 January 2013