Private ruling: CGT - main residence exemption
Date of advice: 29 January 2026
Published: 30 March 2026
Ruling period: Year ending 30 June YYYY
Date scheme commenced: 1 July YYYY

Ruling: Q1: Are you entitled to the main residence exemption on the sale of your dwelling and adjacent land up to two hectares in size under section 118-110 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. You had an ownership interest in the property. As you had occupied the dwelling solely as your main residence and did not use all or any part of the property to produce income, you can disregard the CGT you made from CGT event under section 118-110 of the ITAA 1997. | Q2: Will you be liable to capital gains tax on the area of land exceeding two hectares? | A2: Yes. The main residence exemption only extends to the dwelling plus two hectares of adjacent land. Any land that exceeds two hectares will therefore be subject to capital gains tax provisions. If the land area surrounding a dwelling that is your main residence is greater than 2 hectares, you may choose which particular part of the land is covered by the main residence exemption. If the area of land you select can be separately valued, you calculate your capital gain or loss on the remainder of the land by apportioning the capital proceeds and the cost base on the basis of the valuation. If the area of land you select cannot be separately valued, you may calculate your capital gain or loss on the remainder of the land by apportioning the capital proceeds and the cost base on an area basis.

Relevant facts and circumstances: On MM YY, you and your partner acquired one shareholding in Company A for the sum of $X. Company X is the registered proprietor and legally owned of seven parcels of land. With one shareholding, Company X allocated an area of land for you to use as personal purpose and enjoyment as a main residence dwelling. The size of the land was more than 2-hectares. You and your partner moved in to live in the property and considered it as your main residence. On MM YYYY, you and your partner transferred the share in the company to other taxpayers and vacated the property. You and your partner did not own any other property during this time.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-110