Under the capital gains tax recommended by the Tax Working Group last week, the family home would be exempt – except when it's not.

As is to be expected with complicated tax policy, nothing is as straight forward as it seems.

When Finance Minister Grant Robertson put the group together at the end of 2017, his instructions were explicit.

"Certain areas will be outside the scope of the review, including [any] changes that would apply to the family home or land beneath it."

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As expected, the group's chairman, Sir Michael Cullen, made it clear that his capital gains tax (CGT) recommendation excluded the family home.

But there were more than a few caveats within this exemption, for example, what happens if someone uses their personal home as an Airbnb?

Well, according to Cullen's report, if a homeowner rents a room (or rooms) on Airbnb they can essentially choose their tax.

If the property is used as the person's home more than 50 per cent of the time, it falls under the category of a family home and thus the owner could choose not to pay capital gains when the home is sold.

But, in this instance, the homeowner would not be able to claim any deductions for the cost relating to the property – for example, rates and interest.

If the homeowner/Airbnb host wants the deductions, the property would then be eligible for a CGT.

It's the same case when it comes to using a family home as an office.

For example, if someone owns a five-bedroom home where the family live, but also a small room is used for business purposes.

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As the area of the house used for the work is just small and more than 50 per cent of it is used as a residence, the homeowners can choose if they wanted to claim deductions, or to have the CGT apply to the home.

Cameron Bagrie, head of Bagrie Economics, said the choice between the two types of tax would be problematic for small businesses.

"These are not businesses that are knocking the ball out of the park. If they have to sacrifice those expenses, that's going to be a big deal."

The group's CGT proposal also said an excluded family home, and the land under it, needed to be less than 4,500m2 to be exempt from a CGT.

"Where the total area of the property is greater than 4,500m2 or is not required for the reasonable occupation and enjoyment of the house, the gain on sale should be apportioned on a reasonable basis," the report said.

In other words, if a home is bigger than 4,500m2 – the property is liable for a CGT.

There are also exceptions when it comes to having flatmates.

In the case when a homeowner takes on flatmates to help pay the mortgage, much like is the case with a home office and an Airbnb, there is a choice.

If the property is more than 50 per cent used by the homeowner, they could choose to pay a CGT when they sell it but he would be giving up any deductions for expenses.

If they wanted the deductions instead, he would need to pay a CGT on the portion of the house that was used for income-earning purposes.

The Taxpayers' Union says the caveats were confusing.

"Taxpayers have been told by the Working Group and the Government that the family home will be exempt, but it turns out that in a variety of circumstances that's not quite true," a spokesman said.