Private ruling: CGT - main residence exemption
Date of advice: 22 September 2021
Published: November 2021
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to a Capital Gains Tax (CGT) exemption in relation to the sale of property Y? | A1: No

Relevant facts and circumstances: You own a property located at X. You reside in this property and consider it to be your main residence. In xxx xxxx you and your spouse purchased property Y. You purchased this property to provide a permanent home for your adult child who has an existing disability. Your child lived in property Y from the date of purchase until they moved into property Z purchased by you. You subsequently sold property Y. Both properties were purchased by you solely for the purpose of providing a residence for your adult child due to their disability. Neither of the properties were purchased by you for investment purposes.

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

Reasons for decision: Summary: Generally, you can ignore a capital gain or capital loss from a CGT event that happens to a dwelling that is your main residence (section 118-110 of the Income Tax Assessment Act 1997 (ITAA1997). In order to obtain a full exemption from CGT, the dwelling must have been your main residence for the entire period you owned it (section 118-110 and 118-185 of the ITAA 1997), must not have been used to produce assessable income (section 118-190 of the ITAA 1997) and any land on which the dwelling is situated should not be more than two hectares. In your case, you have never resided at the property. We acknowledge that you only acquired the property in order to provide a residence for your child who suffers from a mental disability and the property was not used for investment purposes. However, for the main residence exemption to apply, the legislation requires the owner of the property to reside at the property. As you never resided at the property, you do not meet the requirements for the main residence exemption. There are no other CGT exemptions that are applicable in your circumstances. Although we empathise with your situation, you do not meet the legislative requirements for any CGT exemptions and the legislation does not provide the Commissioner with any discretion to be able to provide you with a CGT exemption.