Harper News

Land owned before CGT, but can a recent house built on it be CGT-free?

Posted: June 10, 2017

Naturally, a taxpayer will assume that when they build a house, that building will not qualify for CGT exemption until it becomes that taxpayer’s “main residence”.

There is however a section of the regulations that allows that taxpayer to extend the period of the main residence exemption so that this is initiated during the period when they are building or repairing the dwelling and not living in it. A recent Tax Determination (TD 2017/13) deals with this.

In part, this is enabled because the term “main residence” is not clinically defined in the legislation.

The ATO provides the following general guidance on the factors that may be relevant in working out whether a property is a taxpayer’s main residence:

  • the length of time you live there – there is no minimum time a person has to live in a home before it is considered to be their main residence
  • whether you and your family lives there
  • whether you have moved your personal belongings into the home
  • the address to which your mail is delivered
  • your address on the electoral roll
  • the connection of services (for example, phone, gas or electricity)
  • your intention in occupying the dwelling.

Generally, a mere intention to construct or occupy a dwelling as the taxpayer’s main residence – without actually doing so – is not sufficient to categorise the building as the taxpayer’s main residence.

The wiggle room with regard to the extension of the CGT-free period has to do with subsection s118-150(2), and a choice that can be made under this subsection. This can allow the taxpayer to treat the property as their main residence for CGT purposes prior to moving in, while the construction or renovation work is still being completed.


Harper Group Pty Ltd Chartered Accountants Frankston Ph 9770 1547

Disclaimer: All information provided in this article is of a general nature only and is not personal financial or investment advice. Also, changes in legislation may occur frequently. We recommend that our formal advice be obtained before acting on the basis of this information.

Contact Us

Please fill out the form below and we will get back to you as soon as possible.

* Required
Business Diagnostic Tool

Health 180 Business Diagnostic

Reveals the most effective way for you to improve your business, plus the key areas for you to start on right now ...

First time users: click the Registration button, otherwise click the Login button

Use Promo Code:  AID0744-02N




Online Calculator

Click here to use our Online Calculator

Privacy Statement  |  3/506 Nepean Highway (PO Box 11040) Frankston Vic Australia 3199  |  Tel 03 9770 1547
Harper Group Pty Ltd ABN 19 067 923 611  |  © 2013 Harper Financial Group Pty Ltd  ABN 46 124 548 812