Check if you qualify for the main residence exemption and whether your home is considered a dwelling.
Eligibility conditions
Your main residence (your home) is exempt from CGT if you are 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
- has not been used to produce income – that is, you have not 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 do not pay tax on any capital gain when you sell your home and you ignore any capital loss.
If you do not meet all these conditions, you may still be entitled to a partial exemption.
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 whether 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. You are not entitled to the exemption for a vacant block.
What is a dwelling?
A dwelling is anything used wholly or mainly for residential accommodation, such as:
- 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.
A flat or home unit often includes areas that are physically separate, such as a laundry, storeroom or garage. They are exempt from CGT on the same basis as the flat or unit. However, if you dispose of one of these structures separately from the flat or home unit (for example, you sell the garage), they are not exempt from CGT unless they were compulsorily acquired.
Foreign residents
If you were not 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.