tax exempt

Is your adjacent land or separate structure exempt from CGT?

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If you are selling your home, you can claim the main residence tax exemption for the property you live in, including the land adjacent to it and other structures associated with the property like a separate garage or laundry. The main residence exemption includes compulsory acquisition of the main residence.

A residence or dwelling is a property used mainly for residential accommodation, including a cottage or home, a flat or apartment, a strata title unit, a unit located in a retirement village and a house boar, caravan or mobile home.

The land covered by the main residence exemption is close to, near, adjoining or neighboring the dwelling.

To be tax exempt, the land and dwelling should be sold together and the owner should have used the land mainly for private and domestic purposes with the dwelling. The total area should also not be more than two hectares. If it is more than two hectares, the owner can choose which two hectares will be exempt and the remainder will subject to CGT.

A home unit or flat usually comes with areas that are separate physically from the unit, such as a store room, laundry or garage.

If these areas were used primarily for private and domestic purposes associated with the unit, they will be exempt from CGT as well. However, if these structures are disposed separately from the unit or flat, the capital gain or loss will not be exempt from capital gains tax.

For more information about property investment and capital gains tax in Australia, contact a Specialist to discuss your particular circumstances.

For more tips and advice from other industry experts, visit www.chan-naylor.com.au

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Photo: Flickr
Source: Eknowhow

2 responses to “Is your adjacent land or separate structure exempt from CGT?”

  1. Sharon Fulcher says:

    Is there an increasing trend to buying rural/vacant/natural land for biobanking/carbon credits. Have there been any articles by your group as to the long term financial viability of these growing trends? Examples include groups like Trust for Nature and selling through groups such as Eco Land? Thanks

    • Chan & Naylor says:

      Hi Sharon
      The response below is from Robert Edwards who carries out Green Auditing

      “… If they’re talking about people buying land to bridge movement for animals between two ecosystems and to keep an endangered species alive or forest type still in existence and then trying to make a claim to the federal government under a ERF (Energy Reduction Fund) or old carbon farming initiative project then my experience is that people spend the $ without much chance of any real income or profit or capital gain and use any carbon credit (ACCU) income to fund further land acquisitions…”

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