Private ruling: CGT - cost base
Date of advice: 21 October 2025
Published: 8 December 2025
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you able to use the market value of the property on the day it was sold as the first element of the cost base when calculating any capital gain? | A1: No.

Relevant facts and circumstances: You purchased the property a number of years ago. The property was first rented shortly after being purchased. The lease ended a few years ago. You moved into the property after the lease ended and commenced treating it as your main residence. The property was sold a few months ago.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 110-25 | Income Tax Assessment Act 1997 section 118-185

Reasons for decision: Summary: You make a capital gain or loss as a result of a capital gains tax (CGT) event happening to a CGT asset. CGT assets include real estate acquired on or after 20 September 1985. CGT events are those transactions that occur to a CGT asset that result in you either making a capital gain or capital loss. You make a capital gain if your capital proceeds from the sale of a CGT asset are greater than the cost base for the purchase of that asset, for example, if you receive more for an asset than you paid for it. You make a capital loss if your reduced cost base for the purchase of that asset is greater than the capital proceeds resulting from the sale of that asset, for example, if you receive less for an asset than you paid for it. The first element of the cost base of a CGT asset is the money you paid, or are required to pay, in respect of acquiring it (subsection 110-25(2) of the ITAA 1997). Capital gains tax is not a separate tax, it forms part of your assessable income and is taxed at your marginal tax rate. | Detailed Reasoning - Application to your circumstances: You rented the property out for several years. You then moved into the property and commenced treating it as your main residence until it was sold. As the property was not your main residence for the whole of your ownership period you are not entitled to a full main residence exemption on the property. Where a full exemption is not available, you may be entitled to a partial exemption under section 118-185 of the ITAA 1997. You calculate your capital gain or capital loss as follows: Capital gain or capital loss amount x Non-main residence days Days in your ownership period You are entitled to a partial main residence for the days you lived in the property as your main residence. The first element of the cost base will be what you paid for the property and not the proceeds of the sale. There is no discretion under the legislation to allow you to use the proceeds of the sale of the property as the first element of the cost base when calculating any capital gain.