Private ruling: CGT - vacant land
Date of advice: 16 March 2026
Published: 29 June 2026
Ruling period: Year ending XX XXXXX 20XX
Date scheme commenced: XX XXXXX 20XX

Ruling: Q1: Are you required to pay capital gains tax on the sale of your vacant land? | A1: Yes

Relevant facts and circumstances: On XX XXXX 20XX, you purchased a vacant block, initially, to build a new main residence. Your spouse had medical issues; therefore, you were unable to build as the funds were used for health expenses. The ongoing medical issues of your spouse has forced the sale of the land. On XX XXXXX 20XX, you signed a Contract of Sale. On XX XXXXX 20XX, the property settlement occurred. You held the land as a long-term private asset. There were no development activities on the land. The land was not subdivided, rezoned or otherwise developed for commercial or profit-making purposes. You built a shed on the land. Apart from installing the shed no other works have been undertaken that would alter the character of the land or indicate any intention to develop it.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 118-110 | Income Tax Assessment Act 1997 section 108-5 | Income Tax Assessment Act 1997 section 102-20

Reasons for decision: Summary: A capital gain or capital loss may arise if a CGT event happens to a capital gains tax asset. The most common CGT event is A1, occurring when an entity disposes of their ownership interest in an asset. The sale of vacant land would be considered to be a CGT A1 event. The main residence exemption to disregard any capital gain or capital loss in the disposal of a CGT asset can only be applied to land owned by a taxpayer, if the taxpayer sells the land as part of the sale of a dwelling. This can include situations where a taxpayer builds a dwelling on the land or repairs, renovates or finishes building a dwelling on the land and then moves into the completed dwelling. The only time that the main residence exemption applies to the sale of vacant land is where it is sold after the accidental destruction of the main residence that was situated on it. There are no other provisions that provide an exemption for capital gain or capital loss due to the sale of vacant land. There are limited situations that enable the main residence exemption to be extended to vacant land, and for those to apply there must be a dwelling that you have resided in during your ownership period. The mere intention to construct a dwelling on vacant land without doing so is insufficient to obtain the main residence exemption. | Detailed Reasoning - Application to your circumstances: In your case, CGT event A1 occurred when you sold the vacant land. Regardless of the intentions that you held when you bought the block of land you are not selling a dwelling with the land, nor are you selling a vacant block of land on which an existing dwelling was destroyed. As you do not meet any of the necessary conditions to be eligible for any of the exemptions in the disposal of vacant land, you will not be able to disregard any capital gain made on the disposal of vacant land, and you must include any capital gain made on the disposal of vacant land in your 20XX-XX income tax return. Whilst we acknowledge your circumstances and the challenges you faced, there is no discretion available to the Commissioner to allow a main residence exemption on the sale of vacant land and therefore, you are unable to disregard any capital gain or loss under the main residence exemption. You will be entitled to claim a 50% discount on any capital gain because the acquisition date is more than 12 months prior to the date of disposal.