Private ruling: Main residence exemption
Published: April 2012

Ruling: Are you entitled to treat your dwelling as your main residence whilst you intermittently reside in a retirement village? | Yes | Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015 | 1 July 2011

Relevant facts and circumstances: You jointly purchased a unit with your spouse after 20 September 1985. In 2005 you bought into a retirement villa. You bought into the retirement villa as you feel as a couple you are getting older and are starting to lose some of your mobility independence. Your spouse and you alternate your place between the unit and the retirement villa. Both residences are fully furnished. Mail is delivered to both your unit and the villa. You will not be using either of your dwellings for income producing purposes. Your spouse and you have both decided your unit will be your main residence for capital gains purposes. Income Tax Assessment Act 1997 Section 104-10 Section 118-110 Section 118-145 Section 118-170 Under section 118-110 of the Income Tax Assessment Act 1997 (ITAA 1997), you can generally disregard a capital gain or capital loss that you make on the disposal of your ownership interest in a dwelling that is your main residence. In most circumstances, you may only nominate one dwelling as your main residence at any one time. Having a different home from your spouse Section 118-170 of the ITAA 1997 states that if, during a period, a dwelling is your main residence and another dwelling is the main residence of your spouse (except for a spouse living permanently separately and apart from you), you and your spouse must either: a) Choose one of the dwellings as the main residence of both of you for the period; or b) Nominate the different dwellings as your main residence for the period Your spouse and you have indicated that you will both choose your unit as your main residence you satisfy the requirements of Section 118-170. Absence from main residence Subsection 118-145(1) of the ITAA 1997 allows you to make a choice that a dwelling continues to be treated as your main residence even though it has ceased to be so. The choice can be made for a total of six years where a dwelling was used for the purpose of gaining or producing assessable income, or indefinitely where it was not used for this purpose. In your case, you will not be using the unit to produce income whist you occupy your villa. As your unit will be your main residence and as long as you don't use the unit to produce income, you are entitled under section 118-145 of the ITAA 1997 to continue to treat your unit as your main residence for an indefinite period should you need to move into the retirement village. You cannot rely on the rulings in the Register of private binding rulings in your tax affairs. You can only rely on a private ruling that we have given to you or to someone acting on your behalf. The Register of private binding rulings is a public record of private rulings issued by the ATO. The register is an historical record of rulings, and we do not update it to reflect changes in the law or our policies. The rulings in the register have been edited and may not contain all the factual details relevant to each decision. Do not use the register to predict ATO policy or decisions.



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