The context of the “permitted area” in this FAQ relates to the conditions under which Private Residence Relief (PRR) can be claimed to exempt you from paying Capital Gains Tax (CGT) when selling your home. PRR is available if certain conditions are met, one of which concerns the size of the property’s grounds. The “permitted area” specifies the maximum size of land (including the area occupied by the house) that can qualify for full PRR. If the grounds exceed this permitted area, the excess may not qualify for PRR, potentially resulting in a CGT liability on the gain associated with that excess land when the property is sold.

The “permitted area” for the grounds of your home is up to 5,000 square metres (about 1.24 acres), including the area of the house itself. If the grounds exceed this area, you may be liable for Capital Gains Tax on the portion of the gain attributable to the excess land when you sell your property.