Home ownership is a widely held aspiration in Australia, providing security of tenure and long term economic benefits to home owners. Owning a home can also bring social and cultural benefits such as a sense of belonging. For home owners, the dwelling and the land on which it stands is a major asset, and for many it’s their main asset. Home ownership rates in Australia have been fairly stable at around 70% for many decades.

Australian property prices for the six major cities has produced average capital gains of 8.6% pa since 1955. After accounting for inflation the average capital gain is 3.1% pa over inflation (Dr Nigel Stapledon, A History of Housing Prices in Australia 1880-2010).

The main residence is a very tax effective investment, because if the main residence exemption applies, then any capital gains made on the residence sale are tax free. The main residence exemption generally applies to a dwelling owned by the taxpayer to the extent the dwelling was the taxpayer’s main residence and not used for income-earning purposes during the ownership period.

The ownership period is calculated from the settlement date on acquisition of the property to the settlement date on the sale of the property. Generally the main residence exemption is only available for one dwelling at any point in time.

An exception to this is the 6 month rule which states that where a taxpayer acquires a new dwelling that is to become their main residence, and the taxpayer still owns their existing main residence, both dwellings can be treated as the taxpayer’s main residence for a period of up to 6 months.


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