The ATO website has the following example for property sold over 2 hectares:
Example: land used for private purposes
Mohammed bought a house with 15 hectares of land. He used 10 hectares for apple farming and 5 hectares for private purposes. Mohammed can get the main residence exemption for:
- the house
- 2 hectares of land he selects out of the 5 hectares that he uses for private purposes (the land he selects must include the land under the house).
After 9 years, Mohammed decided to sell. He had his house valued. The valuation stated that the house and the 2 hectares of land he had selected were worth two-thirds of the total value of the property.
Mohammed can claim the main residence exemption for two-thirds of the capital gain on the sale of the property.
This example is very simplistic and implies that you do not need to apportion the purchase and cost base of the property. This is different to ATO ID 2002/691 and TD 1999/67. If teh example given is correct, please provide further details, but if not correct please update the website.
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