Private ruling: Capital gains tax - main residence exemption
Date of advice: 16 June 2017
Published: August 2017
Ruling period: Year ending 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Is the capital gain or capital loss made on the sale of Dwelling B, New South Wales disregarded? | A1: Yes.


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

Reasons for decision: Detailed Reasoning - Capital gains tax: Capital gains tax (CGT) is the tax you pay on any capital gain you make and include on your annual tax return. There is no separate tax on capital gains; it is merely a component of your income tax. You are taxed on your net capital gain at your marginal tax rate. You make a capital gain or capital loss if a CGT event happens. The most common CGT event happens when you dispose of an asset to someone else, for example, if you sell or give away an asset. A capital gain or capital loss will occur when a capital gains tax (CGT) event happens to a CGT asset. The most common CGT event is CGT event A1 which occurs when a CGT asset is disposed of. | Detailed Reasoning - Main residence exemption: Generally, you can fully disregard a capital gain or capital loss made on the sale of a dwelling that is your main residence if: ● the dwelling was your home for the whole period you owned it ● the dwelling was not used to produce assessable income; and ● any land on which the dwelling is situated is not more than 2 hectares. In your circumstances, you acquired an interest in dwelling B and used the dwelling as your main residence, accordingly you are able to disregard any capital gain or capital loss.

Relevant facts: You and your spouse acquired dwelling A prior to 20 September 1985. | You and your spouse resided in this dwelling. | You and your spouse acquired another dwelling (dwelling B) and moved into this dwelling as your main residence. | Dwelling A was occupied by your children from the acquisition of dwelling A onwards. | You and your spouse would stay at dwelling A occasionally when you visited. | Your spouse passed away a number of years ago. | You will sell dwelling B.