Treating land as your main residence

Choosing to treat land as your main residence while you build

Generally, if you build a dwelling on land you already own, the land does not qualify for exemption until the dwelling becomes your main residence for capital gains tax (CGT) purposes.

The area of land that may be exempted under this provision is limited to two hectares and subject to certain provisions. See 'Land adjacent to a dwelling' in the Introduction to capital gains tax for more details.

Vacant land may also be treated as your main residence if it is vacant because your home has been destroyed.

However, you can choose to treat land as your main residence for up to four years before the dwelling becomes your main residence in certain circumstances. You can choose to have this exemption apply if you acquire an ownership interest (other than a life interest) in land and you:

• build a dwelling on the land
• repair or renovate an existing dwelling on the land, or
• finish a partly constructed dwelling on the land.

There are a number of conditions that you must satisfy before you can claim the exemption. You must first finish building, repairing or renovating the dwelling and then:

• move into the dwelling as soon as practicable after it is finished, and
• continue to use the dwelling as your main residence for at least three months after it becomes your main residence.

Sections within Choosing to treat land as your main residence while you build

• Period for which the land is exempt
• Replacing a demolished or destroyed dwelling
• Implications of your choice
• If you die during construction