Mr Gay, the former boss of timber giant Gunns Ltd, died in April last year, aged 75, following a battle with cancer.

The East Launceston home, located at 7 Clarence Street, has been on the market for more than two years, with an original asking price of $2.5 million.

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Towering over a 1500 square metre greenfield site, the three-storey home, built in 2009, boasts an indoor pool, a gym and a cellar, as well as a large outdoor area.

Knight Frank partner Sam Woolcock, who marketed the property for the past eight months, said a local family had bought the home, despite significant interest from prospective interstate buyers.

"The allotment was so large on the property that [the Gay family] were able to build a significantly large home in an area where there's just never been that amount of land come up for a greenfield site," he said.

"The home was large, built at the very top end of the spectrum as a fit-out. It just didn't have any peers.

"It was nice to see that it was bought by a local family."

The family that bought the home have asked for the purchasing price to be kept confidential.

Mr Woolcock said the home had attracted a price close to what the vendor was originally asking for.

In 2013, the same year Gunns was placed into liquidation, Mr Gay was convicted of insider trading, after pleading guilty to the charge.

He was the head of the company from 1986 until 2010, when he resigned.