Private ruling: CGT - Main residence exemption
Published: August 2011
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Question and Answer | Is the capital gain you made on the disposal of dwelling A disregarded? | Yes

Relevant facts and circumstances: You acquired dwelling A during the 2000 income year and lived in it as soon as practicable. You later acquired dwelling B and moved out of dwelling A in the 2008 income year and lived in dwelling B as soon as practicable. You rented out dwelling A between the 2008 and 2011 income years. You sold dwelling A during the 2011 income year and made a capital gain. You made an absence choice to continue to treat dwelling A as your main residence after you no longer lived in it.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 118-110 Income Tax Assessment Act 1997 Section 118-145 Income Tax Assessment Act 1997 Section 118-140

Reasons for decision: Summary: Generally, you disregard any capital gain or capital loss that you make on the sale of a dwelling that was your main residence for your entire ownership period. In some cases, you can choose to continue to treat a dwelling as your main residence even though you no longer live in it. You can only make this choice for a dwelling that you have first occupied as your main residence. Where you use the dwelling to produce income, for example you rent it out; you can choose to treat it as your main residence while you use it for that purpose for a period of up to six years after you stop living in it. In your case, you moved into dwelling A as soon as practicable after the contract settled. You resided in dwelling A and established it as your main residence. You have chosen to continue to treat dwelling A as your main residence after you moved out of it and commenced renting it out. You have rented dwelling A for a total period that is less than the six year period allowed. Accordingly, you are entitled to a main residence exemption in respect of dwelling A and any capital gain that you made on its sale is disregarded. | Detailed Reasoning - Additional information: Please note as a result of your absence choice in regard to dwelling A you will not get a full main residence exemption on the sale of dwelling B.

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