Disposal of your main residence is generally exempt from CGT. A dwelling is your main residence if:
- you and your family live in it
- your personal belongings are in it
- it’s the address your mail is delivered to
- it’s your address on the electoral roll
- services such as gas and power are connected.
Disposal of your rental property might be subject to CGT. If you rent out the property, you can continue to treat it as your main residence for up to six years. If you rent out the property for more than six years, sell the property and make a capital gain, you may be required to pay an apportioned CGT on the property.
If you have used any part of your home to produce income – for example, by renting out all or part of it – you’re generally not entitled to the ‘main residence’ full exemption. Factors need to be considered when you calculate the CGT under this situation:
- the proportion of the floor area that is set aside to produce income
- the period you use it for this purpose
- whether you’re eligible for the ‘absence’ rule (see Treating a dwelling as your main residence after you move out)
- whether it was first used to produce income after 20 August 1996.