Eligibility conditions
Your main residence (your home) is exempt from Capital Gains Tax (CGT) if you're an Australian resident and the dwelling:
- has been the home of you, your partner and other dependants for the whole period you have owned it
- hasn't been used to produce income – that is, you haven't run a business from it, rented it out or 'flipped' it (bought it to renovate and sell at a profit)
- is on land of 2 hectares or less.
If you meet these conditions, you don't pay tax on any capital gain when you sell your home and you ignore any capital loss.
If you don't meet all these conditions, you may still be entitled to a partial exemption. You can work out the proportion that is exempt using the CGT property exemption tool.
CGT property exemption toolFor a summary fact sheet with common scenarios about CGT and eligibility for the main residence exemption, go to the ATO Publication Ordering Service to download Capital gains tax and the main residence exemption (NAT 75488, PDF, 301KB)External Link.
What is a main residence?
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
- services such as gas and power are connected.
The length of time you stay in the dwelling and if you intend to occupy it as your home may also be relevant.
To be your main residence, your property must have a dwelling on it and you must have lived in it.
Vacant land
You're not entitled to the exemption for a vacant block. If you subdivide and sell land that used to be part of your home, you need to consider if any profit is treated as a capital gain or income.
What is a dwelling?
A dwelling is anything used wholly or mainly for residential accommodation, for example:
- a house or cottage
- an apartment or flat
- a strata title unit
- a unit in a retirement village
- a caravan, houseboat or other mobile home.
The main residence exemption can extend to garages, storerooms or other structures associated with a flat or home unit, to the extent they are used primarily for private or domestic purposes in association with the flat or home unit. However, the exemption only applies if the adjacent structure, is sold together with the flat or home unit.
Foreign residents
If you weren't a resident of Australia for tax purposes while you were living in the property, you are unlikely to satisfy the requirements for the main residence exemption.
If you are a foreign resident when a CGT event happens to your residential property in Australia (for example, you sell it), you may not be entitled to claim the main residence exemption.