Generally, if you are an individual (not a company or trust) you can ignore a capital gain or capital loss from a CGT event that happens to your ownership interest in a dwelling that is your main residence (also referred to as ‘your home’). However, special rules apply if the interest in the dwelling is held by the trustee of a Special Disability Trust. In such cases, the trustee of the Special Disability Trust will be eligible for any main residence exemption to the extent the individual principal beneficiary of the Special Disability Trust would have been if that individual principal beneficiary owned the interest in the dwelling.
To get the full exemption from CGT:
- the dwelling must have been your home for the whole period you owned it
- you must not have used the dwelling to produce assessable income, and
- any land on which the dwelling is situated must be two hectares or less.
If you inherited a dwelling or a share of a dwelling and it was not the deceased’s main residence, you are unlikely to get a full exemption. See flowchart 3.6 in appendix 3, and Inherited main residence.
You may get only a partial exemption if:
- the dwelling was your main residence during only part of the period you owned it
- you used the dwelling to produce assessable income, or
- the land on which the dwelling is situated is more than two hectares.
Short absences from your home (for example, annual holidays) do not affect your exemption.
If you are a foreign resident when a CGT event happens to your residential property in Australia you may no longer be entitled to claim the main residence exemption.
Where the deceased was a foreign resident, the changes may also apply to:
- legal personal representatives, trustees and beneficiaries of deceased estates
- surviving joint tenants
- special disability trusts.
There is a transitional period. To find out more, see Foreign residents and main residence exemption.
If a dwelling was not your main residence for the whole time you owned it, some special rules may entitle you to a full exemption or to extend the partial exemption you would otherwise get. These rules can apply to land or a dwelling if you:
- choose to treat the dwelling as your main residence, even though you no longer live in it, see Continuing main residence status after dwelling ceases to be your main residence
- moved into the dwelling as soon as practicable after its purchase, see Moving into a dwelling
- are changing main residences, see Moving from one main residence to another
- are yet to live in the dwelling but will do so as soon as practicable after it is constructed, repaired or renovated and you will continue to live in it for at least three months, see Constructing, renovating or repairing a dwelling on land you already own, or
- sell vacant land after your main residence is accidentally destroyed, see Destruction of dwelling and sale of land.
There are some special CGT rules that are not covered in this section that may affect you if your home was:
- destroyed and you receive money or another asset as compensation or under an insurance policy, see Loss, destruction or compulsory acquisition of an asset
- transferred to you as a result of its conversion to strata title, or
- compulsorily acquired, see Loss, destruction or compulsory acquisition of an asset.
If you own more than one dwelling during a particular period, only one of them can be your main residence at any one time.
The exception to this rule is if you move from one main residence to another. In this case you can treat two dwellings as your main residence for a limited time, see Moving from one main residence to another.
Special rules apply if you have a different main residence from your spouse or dependent children, see Having a different home from your spouse or dependent child.
If you are a foreign resident when a CGT event happens to your residential property in Australia you may no longer be entitled to claim the main residence exemption. There is a transitional period. To find out how this affects you see Foreign residents and main residence exemption.