Private ruling: CGT - main residence - two dwellings on one title - disposal
Published: February 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Is the capital gain made on the sale of your interest in your property disregarded in full? | A1: No.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 108-7 | Income Tax Assessment Act 1997 Section 112-20 | Income Tax Assessment Act 1997 Section 118-110 | Income Tax Assessment Act 1997 Section 118-120.

Reasons for decision: Summary: Capital gains tax (CGT) is the tax you pay when a CGT event happens to a CGT asset, such as land. The most common CGT event is CGT event A1, which occurs when you dispose of an asset, or interest in an asset to another party. | Detailed Reasoning - Tenants in common: Individuals who own a CGT asset as joint tenants are treated as if they each owned a separate CGT asset constituted by an equal interest in the asset and as if each of them held that interest as a tenant in common. Tenancy in common is a type of co-ownership where two or more persons own interests in the same piece of property. The tenants in common hold undivided shares, possessing the property in common and without exclusive possession of any part of it. Taxation Ruling IT 2485 states that where a dwelling is not the sole or principal residence of all joint owners, the exemption provided on disposal (main residence exemption) is available only to the joint owner or each joint owner who occupied the dwelling as his or her sole or principal residence in respect of his or her share in the dwelling. In your situation, as a joint tenant occupying dwelling A as your main residence you will benefit from the main residence exemption in respect of that interest in the dwelling. Any other joint tenants not occupying that dwelling as their main residence will be subject to CGT on their interest in the dwelling. As dwelling A was your main residence and you have not resided in dwelling B as a main residence any capital gain or capital loss made on the disposal of your interest in dwelling B is not disregarded. | Detailed Reasoning - Note:: The main residence exemption that applies to your interest in a dwelling also exempts 2 hectares of your interest in land that is adjacent to your dwelling.

Relevant facts: You purchased a block of land on one title with other parties. | Settlement for the contract for sale occurred after 19 September 1985. | You and the other parties built multiple dwellings (dwelling A and dwelling B) on the one title and moved into the dwellings as soon as practicable. | You occupied dwelling A as your main residence. | You have supplied a copy of the following documents which forms part of this private binding ruling: | · Land clearance certificate, certificate number X | · Valuation notice rates and charges assessment Number Y | · Valuation notice rates and charges assessment Number Z | You and the other parties have sold the land and dwellings and have made a capital gain.