Windfall gains tax residential land exemption
An exemption applies to eligible residential land.
Key information
When land is rezoned and windfall gains tax applies, you may get an exemption for residential land. For each planning scheme amendment that rezones land, up to 2 hectares of residential land owned by the same owner or group is exempt.
Residential land can include primary production land with a residence on it.
You do not need to live on the land for it to be exempt. Your home, as well as investment properties or secondary homes, are eligible for the exemption.
We determine whether this exemption applies when the windfall gains tax event occurs. The assessment tells you what to do if there is an error on your assessment, such as a missing exemption.
Residential land definition
For windfall gains tax, residential land means:
- land (including primary production land) with a building on it, which:
- is designed and constructed primarily for residential purposes, and
- may lawfully be used as a place of residence
- land on which a residence is being constructed or renovated if:
- the land previously had a residential dwelling, and
- it could be lawfully used as a place of residence before construction or renovation started or had become unable to be lived in.
The land cannot have been vacant or never used for residential purposes.
For the exemption to apply, we must be satisfied the land is primarily used for residential purposes, unless it is primary production land with a residence.
Primary production land
For primary production land with a residence, the land does not need to be used primarily for residential purposes if the farming activity meets the definition of primary production.
Not all farmland is considered primary production land. Primary production is defined as:
- cultivation for the purpose of selling the cultivated produce in a natural, processed or converted state
- maintaining animals or poultry for the purpose of selling them or their offspring or bodily produce
- keeping bees for the purpose of selling their honey
- commercial fishing, including the preparation for commercial fishing or the storage or preservation of fish or fishing gear
- cultivating or propagating plants, seedlings, mushrooms or orchids for sale.
This means primary production land with a residence is residential land, even if most of that land is used for primary production purposes.
- Where the land is more than 2 hectares, only 2 hectares can be exempt.
- Adjoining land on a separate title without a residence is not residential land, even if it forms one farm owned by the same owner as the primary production land with a residence on it.
Vacant land
Vacant land is not exempt.
Land is not residential land if the only residence on it is a movable home like a caravan.
Commercial residential land
Commercial residential premises – such as hotels, residential care facilities, supported residential service and retirement villages – are not residential land.
However, a separately owned residence held on a separate title within the commercial residential premises is residential land. For example, an apartment in a serviced apartment complex owned separately to the other apartments used for the business.
Commercial or industrial land
Commercial or industrial land with a small dwelling is not exempt if:
- the building is designed and constructed primarily for commercial or industrial purposes, or
- the primary use of the land is commercial or industrial purposes.
Land exceeding 2 hectares
If you own more than 2 hectares, only 2 hectares can be exempt. Windfall gains tax applies to land exceeding 2 hectares.
The percentage of the total land exceeding 2 hectares is the percentage of the taxable value uplift that is taxed. You cannot choose which 2 hectares are exempt.