Private ruling: Capital gains tax - investment property
Ruling period: Year ended 30 June 2012. | Year ended 30 June 2013. | Year ended 30 June 2014.
Date scheme commenced: 1 July 2011.

Ruling: Q1: Will your investment property be exempt from capital gains tax when you sell it? | A1: No. | Q2: Will the investment property be considered your main residence when you move in? | A2: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 118-110 | Income Tax Assessment Act 1997 118-185

Reasons for decision: Detailed Reasoning - Is the dwelling your main residence?: There is no statutory period of time that you have to reside in a dwelling for it to be considered your main residence. However, the Commissioner has set out the following factors to be considered when determining if a dwelling is a person's main residence: · the length of time you live in the dwelling (there is no minimum time a person has to live in a home before it is considered to be their main residence) · whether your family lives there · whether you have moved your personal belongings into the home · the address to which your mail is delivered · your address on the electoral roll · the connection of services such as telephone, gas and electricity and · your intention in occupying the dwelling. In this case you intend to move all your personal belongings into the home and all your bills and mail will be delivered to this address. It will also be the address on your driver's license and the electoral roll. These factors indicate that the dwelling will be considered your main residence. | Detailed Reasoning - Main residence exemption: Generally, you can ignore a capital gain or loss you make on the disposal of a dwelling that was your main residence if: · the dwelling was your main residence for the whole period you owned it, and · the property was not used to produce assessable income. In this case the dwelling was not your main residence for the entire ownership period as it was used as an investment property and therefore would not be entitled to the full main residence exemption. | Detailed Reasoning - Partial exemption: As the dwelling was not your main residence throughout your entire ownership period. You are entitled to a partial exemption as the dwelling was your main residence for part of your ownership period. To calculate your capital gain or capital loss on the property the following formula must be used: Capital gain or capital loss = Non-main residence days ____ Days in your ownership period Capital gain or capital loss means the total capital gain or capital loss you would have made from the capital gains tax (CGT) event if the main residence exemption had not applied. Non-main residence days mean the number of days in your ownership period when the dwelling was not your main residence. Days in the ownership period means the total number of days in your ownership period.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns. | Relevant facts: You own an investment property. | The land for the investment property was purchased and construction of the house completed. | The investment property was used as a rental property. | You now intend to move into the investment property as your main residence. | You intend to sell the investment property and move into a retirement village within the next three years. | You and your partner have for several years been living permanently separately and apart from each other.