According to BANTACS:
Purchased To Use As Your Home:
This section assumes that the property is 2 hectares or less, you have owned it for more than 12 months and
you have only used the property as your home up until the subdivision.
if you cut a block off and sell it there will be no main residence exemption at all because
you are not selling your home. Your exemption would remain with the block your home is on.
If you are subdividing your home block and you do not normally develop land or build houses you need to
limit your activities to the extent that you will not be considered in the business of developing the land. If you
simply apply to council for approval of the subdivision, and sell your home together with the land up to 2
hectares, to a developer you will not pay a cent in tax because of your main residence exemption. If you cut
the land up yourself, you are starting to get involved in development activities and you start to cross over to
business operations. You will be subject to tax on each block you sell other than the one with your home on it,
but the tax will be at least half if you can stay within the CGT provisions because you are merely realising an
asset rather than starting a business operation.
