Private ruling: CGT - destroyed dwelling
Date of advice: 26 May 2026
Published: 10 August 2026
Ruling period: Year ending 30 June 2028 | Year ending 30 June 2029
Date scheme commenced: 1 July YYYY

Ruling: Q1: Are you entitled to apply the main residence exemption for the disposal of two lots of land (the Property) under section 118-160 of the Income Tax Assessment Act 1997 after your home built on the land was destroyed by flood? | A1: Yes.

Relevant facts and circumstances: X and Y acquired a property after 20 September 1985. X and Y built a dwelling on the property across 2 lots of land which are next to each other (less than 2 hectares in total). X and Y claimed the property as main residence as soon as practicable. In YYYY, the property was inundated with flood waters causing structural damage to the footings and foundations. An inspection found that the expense to rectify the foundations was not viable and a demolition of the building was offered. X and Y have no intention to fix the dwelling or rebuild a new one on the land. They moved to another property and took step to facilitate the sale of the property. X and Y have neither claimed nor will claim any other dwellings as their main residence during the ruling period. The property has not been used to produce assessable income at any time.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-110 | Income Tax Assessment Act 1997 section 118-160

Reasons for decision: Summary: Section 118-110 of ITAA 1997 provides that a taxpayer may disregard a capital gain or capital loss from a CGT event that occurred to a dwelling if that dwelling was taxpayer's main residence. Section 118-160 of ITAA 1997 advises that if your main residence is accidentally destroyed, you can choose to apply main residence exemption as if it still existed, however, you cannot treat any other dwelling as your main residence during that period. | Detailed Reasoning - Application to your circumstances: Your main residence was destroyed in the floods and you don't have any intention to re build another dwelling on the land. You have not claimed, and will not claim, any other dwelling as your main residence during the ruling period. So, you can choose to treat your property as the dwelling existed. Therefore, you can disregard a capital gain or capital loss you make when you dispose your property.