Private ruling: CGT main residence exemption
Date of advice: 4 February 2016
Published: March 2016
Ruling period: Year ending 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020 | Year ending 30 June 2021 | Year ending 30 June 2022
Date scheme commenced: 1 July 2016

Ruling: Q1: Will you be able to continue to treat your current main residence as your main residence if the property is rented for less than six years and you have not made another dwelling your main residence? | A1: Yes.

Relevant facts and circumstances: In 200X, you purchased a house and it has been your main residence. You have accepted a job overseas with a contract period of more than six years. You will be absent from the house for more than six years, but will rent the house for less than six years.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 118-110 and | Income Tax Assessment Act 1997 Section 118-145.

Reasons for decision: Summary: Section 118-110 of the Income Tax Assessment Act 1997 (ITAA 1997) states that you can disregard any capital gain or loss realised on the disposal of a dwelling that was your main residence for your entire ownership period. A capital gain or loss may only be partially disregarded if the dwelling was • not your main residence throughout your entire ownership period, or • used for the purpose of producing assessable income. Absence rule Section 118-145 of the ITAA 1997 provides that you can continue to treat a dwelling as your main residence during periods of absence. • If the dwelling is not used to produce income it can be treated as your main residence indefinitely. • If the dwelling is used to produce income the maximum period that you can choose to treat it as your main residence, while you use it for that purpose, is six years. If you make this choice, you cannot treat any other dwelling as your main residence while you apply this section. You have accepted a job offer overseas for a period of more than six years. You plan to rent your house out for less than six years and leave the house vacant for the rest of your time overseas. Therefore, as the dwelling will be used to produce income for less than six years and provided you do not establish another main residence here or overseas, you will be able to continue to treat your house as your main residence, even though your absence from the dwelling will be greater than six years.