The main residence exemption is fairly well known, that is, capital gains tax (CGT) on your family home is generally exempt. However, if your property is over 5 acres you are likely to have to account for CGT, as the main residence exemption only applies to the first 5 acres. This is something to keep in mind if you have a ‘lifestyle property’ or are planning to buy one.
What to do about this?
- You will need a valuation for the land in excess of the first 5 acres when you:
a. Purchase the property, and
b. Sell the property
- If the land in excess of the 5 acres was used in the running of the business, small business capital gains concessions may reduce the gain depending on a number of factors, such as: how long the land was used by the business and the age of the owners.