Land adjacent to the dwelling



This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

End of attention

The land adjacent to a dwelling is also exempt if:

  • during the period you owned it, the land is used mainly for private and domestic purposes in association with the dwelling, and
  • the total area of the land around the dwelling, including the land on which it stands, is not greater than two hectares. If the land used for private purposes is greater than two hectares, you can choose which two hectares are exempt but the land you choose must include the land on which the dwelling is built.

Land is adjacent to your dwelling if it is close to, near, adjoining or neighbouring the dwelling.

If you sell any of the land adjacent to your dwelling separately from the dwelling, the land is not exempt. It is only exempt when sold with the dwelling. There is an exception if the dwelling is accidentally destroyed and you sell the vacant land or vacant land adjacent to your dwelling is compulsorily acquired (see Destruction of dwelling and sale of land) and Compulsory acquisition of part of your main residence.

Any part of the land around a dwelling used to produce income is not exempt, even if the total land is less than two hectares. However, the dwelling and any buildings and other land used in association with it remain exempt if you do not use them to produce income.

Example 65: Land used for private purposes

Tim bought a home with 15 hectares of land in November 2000. He uses 10 hectares of the land to produce income and five hectares for private purposes. Tim can get the main residence exemption for the home and two hectares of land he selects out of the five hectares that are used for private purposes.

Tim gets a valuation which states that the home and two hectares of land that he has selected are worth two-thirds of the total value of the property. The relative values of the different parts of the property remained the same between the time of purchase and the time of sale.

Tim entered into a contract to sell the property on 8 May 2013. The capital gain from the property is $150,000. Tim may claim the main residence exemption on the two-thirds of the capital gain attributable to the house and two hectares of land, that is, $100,000.

Because he entered into the contract to acquire the property after 11.45am (by legal time in the ACT) on 21 September 1999 and owned it for at least 12 months, Tim reduces his remaining $50,000 gain (attributable to the land) by the CGT discount of 50% after applying any capital losses.

End of example
    Last modified: 04 Jul 2013QC 28207