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rajchopra7(I'm new)I'm new
6 May 2026

Hi


I am seeking clarification regarding the Capital Gains Tax (CGT) implications of a recent property sale.


I originally purchased the property in 2014, and it was always used as our principal place of residence (PPR). In 2021-22, we did knock-down rebuilt and had two dwellings on same land. In 2022, we occupied one of the dwellings as our PPR, while the second dwelling was rented out.

Due to financial constraints, we were required to sell the property in 2025. As part of this process, we completed a subdivision and subsequently sold the investment dwelling while living in other dwelling as PPR.


We have never previously sold any property or undertaken any property development activities.


Could you please confirm whether the sale of the subdivided investment property will be assessed under Capital Gains Tax provisions?


Thank you for your assistance.

Kind regards,

Raj


Appreciate help - @Taxduck @TobyJDodd

@Bruce4Tax @YellowPotato

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66 views
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Bruce4Tax(Taxicorn)Taxicorn
6 May 2026

Rented property will definitely be a CGT disposal.


Best to go to a local tax agent experienced with property.


rajchopra7(I'm new)I'm new
6 May 2026

Thanks Bruce, my agent is suggesting its a property development income as opposed to Capital Gain that requires registration of GST. I'll be having a call with him to understand the reason though before wanted to have opinion.

RachelATO(Community Moderator)Community Moderator
6 May 2026

Hi @rajchopra7,


Yes, it sounds like the sale of the subdivided property will be subject to CGT. When you subdivide a block of land, each resulting block becomes a separate asset for CGT purposes.


For the subdivided block that contained the investment dwelling, you won't be eligible for the main residence exemption because you sold the land separately from your main residence. The main residence exemption only applies to the block containing the dwelling you live in.


To work out your capital gain or capital loss, the date you acquired the subdivided blocks is the same as the date you acquired the original parcel of land in 2014. You'll need to divide the cost base of the original land between the subdivided blocks on a reasonable basis. You can then add costs related to the subdivision, construction of the second dwelling, and selling expenses to the cost base of the investment property block.


You can find detailed information about subdividing and combining land on our website. You may want to use our CGT calculator to help work out your capital gain or loss.

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Will sale of subdivided investment property have CGT? | ATO Community