A property will not be taxable under the bright-line property rule if you meet one of the following exclusions:
- it's your main home and your use meets certain criteria
- it’s used predominately as business premises
- it’s being used as farmland or capable of being used as farmland.
Main home exclusion
Your main home is the property where you live for most of the time. If you have more than 1 property it is the one you have the greatest connection to. You cannot have more than 1 main home.
Which property is your main home depends upon:
- the amount of time you spend living in each house
- where your immediate family lives
- where your personal property is kept
- where your social ties are strongest
- your use of the home
- what other ties (for example: employment, business, economic) you have with the surrounding community.
It's important to note that having the intention to use the property as your main home is not enough, you must have actually used it for this purpose.
There are different rules that apply to your main home depending if it was acquired before, or on or after 27 March 2021. In most cases the date you acquire it is when the sale and purchase agreement to buy it became binding.
| Date property acquired | Main home exclusion criteria |
|---|---|
| Before 27 March 2021 |
You must have used:
|
| On or after 27 March 2021 |
You must have used:
|
Sale of main home acquired before 27 March 2021
Sale of main home acquired on or after 27 March 2021
Limits to claiming the main home exclusion
The main home exclusion does not apply when you:
- have a regular pattern of either buying and selling or building and selling your main home (even if you or your family live in the property before it is sold)
- have used the main home exclusion twice or more over the 2-year period immediately before you sold your main home.
Main home held in trust
Residential properties held in trust can use the main home exclusion if the house sold was the main home of a beneficiary of the trust and one of the following conditions apply:
- the principal settlor does not have a main home
- it is the main home of the principal settlor of the trust that is being sold.
If a principal settlor of a trust has a main home that is not the one being sold by the trust, the main home exclusion cannot apply to any property owned by the trust.
Rollover relief and the main home exclusion
When residential land is sold and rollover relief applies, the usage of the last owner is considered and attributed to the new owner to work out if the main home exclusion applies.
For properties sold on or after 1 July 2024, rollover relief extends to transactions between associated persons.
For more information about rollover relief and when it applies.
Hamish and Jess bought their first family home in July 2024 and settled the property on the HJ Family Trust. They lived in the property for 12 months and transferred the property to another trust, H & J Family Trust, which they are also settlors of. H & J Family Trust rents out the property and after 6 months the property is sold.
The 12-month period that Hamish and Jess lived in the property is attributed to H & J Family Trust. The main home exclusion will apply because the property was lived in for more than 50% of the time (12 out of the 18 months).
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