What is the main residence exemption?
Understand when your home may be exempt from capital gains tax under the main residence exemption.
Summary
Your main residence (your home) may be fully exempt from capital gains tax (CGT) if you are an Australian resident and the property meets the ATO’s main residence conditions for the whole ownership period.
What this means
For a full exemption, the dwelling generally needs to have been your home, and the home of your spouse or dependants where relevant, for the whole ownership period; it must not have been used to produce assessable income; and the land covered by the exemption is generally limited to 2 hectares.
If you do not meet all the conditions, a partial exemption may apply. The absence rule can allow you to continue treating a former home as your main residence for up to 6 years while it is used to produce income, or indefinitely while it is not used to produce income. Foreign residents generally cannot claim the exemption at disposal unless a specific life-events exception applies.
Typical actions
- Confirm when the property became your main residence and how long you lived there.
- Check whether any part of the property was rented out or used to produce income.
- Confirm whether the land covered by the exemption is within the 2-hectare limit.
- Consider whether the absence rule or a partial exemption applies.
- Keep records showing acquisition, occupancy, income-producing use and disposal.
Official ATO sources
Last checked: 25 August 2026
Your main residence – home
Main ATO hub for the main residence exemption.
Eligibility for main residence exemption
Explains the conditions for the full exemption.
Treating former home as main residence
Explains the 6-year rule for former homes.
Capital gains tax property exemption tool
ATO tool to work out your main residence exemption.
Related questions
- How does capital gains tax work?
- What is the CGT discount and how does it work?
- What is cost base for CGT purposes?
- How is rental income taxed when a property is jointly owned?
Important notice: Tax Clarity is an independent information tool. This page provides general information based on official sources. It does not provide tax, legal, financial, or accounting advice. Tax rules can change, and how they apply depends on your circumstances. For advice about your situation, speak with a registered tax agent or qualified professional.
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