Tips to get the main residence exemption right

We're seeing issues with non-reporting of a capital gain, loss or main residence exemption when properties are sold.

1. Ask clients if they have bought or disposed of property in the past income year. If they have bought property, check if they're using the property solely as their primary place of residence, earning income from it (rental or business), or if it's vacant land.
2. Help clients understand record keeping requirements. This will make it easier for you to complete their tax returns when they dispose of their property.
3. Use the 'Property transfer' information in pre-fill reports. You can find it in Online services for agents to support conversations with your clients. Transfer information includes:
   • property address
   • contract date
   • settlement date
   • sale price.
4. Check if clients disposed of vacant land. If they disposed of vacant land, they're not eligible for main residence exemption, even if they intended to build their main residence on it.
5. Check eligibility to use the 6-year absence rule. This rule can only be used if the property was your client's main residence before they rented it out. If clients choose to use this rule, make the election in their tax return by including the main residence exemption in the CGT section.
6. One property as a main residence at a time.
   • Ask clients if they owned more than one property during any of the ownership period of the property they sold.
   • The only exception is the 6-month period when they move from one home to another.
7. Check if clients' Australian tax residency has changed while owning the property. It may affect their eligibility for the main residence exemption.
8. Include the full or partial main residence exemption in your clients' tax returns.
   • under the question Capital gains tax exemption, rollover or additional discount type code
   • select I: Main residence exemption (Subdivision 118-B) from the drop-down list.

For more examples and scenarios, see our recently updated factsheet about CGT and the main residence exemption, which is part of the 2025 Tax time toolkit for investors.