Private ruling: Main residence exemption - overseas property
Date of advice: 23 September 2025
Published: 10 November 2025
Ruling period: Year ended 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Can you claim the main residence exemption on your overseas property under the 6 six year absence rule in accordance with subsection 118-145 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. Based on the facts provided you are entitled to treat your ownership interest in the property in XX as continuing to be your main residence until its disposal and you can claim a full capital gains tax (CGT) main residence exemption on your ownership interest in the property where you make an election under the absence rule for the dwelling before becoming a resident of Australia. You acquired your ownership interest in the property on DD MM 20YY while you were a resident of XX. You departed XX to travel to Australia where you have continued to live from that time until the present time with your Australian resident spouse, becoming an Australian resident. For CGT purposes, you are viewed as having acquired your interest in the property on the date you became an Australia resident. You can continue to treat your dwelling as your main residence in your absence in accordance with section 118-145 of the Income Tax Assessment Act 1997 (ITAA 1997). Under subsection 118-145(2) of the ITAA 1997, if you use the dwelling that was your main residence for the purpose of producing assessable income, the maximum period that you can treat it as your main residence while you use it for that purpose is six years. Further information with an example can be found on the ATO Legal Database in Taxation Determination - TD 95/7 Income tax: capital gains: does subsection 855-45(3) of the Income Tax Assessment Act 1997 prevent a taxpayer from making a choice that section 118-145 of that Act apply to an overseas dwelling that the taxpayer owned before becoming a resident of Australia?

Relevant facts and circumstances: You were born in XXX. You moved to Australia on DD MM 20YY on a 12-month tourist visa (subclass 600). You applied for a temporary resident partner visa (subclass 820) on DD MM 20YY. You were granted a Bridging visa A (BVA) at the same time. A temporary resident partner visa (subclass 820) was granted on DD MM 20YY. You have a spouse who is an Australian citizen and meets the definition of Australian resident under the Social Security Act 1991 . You were granted a permanent resident partner visa (subclass 801) on DD MM 20YY. You applied for Australian citizenship on DD MM 20Y. Australian citizenship was granted on DD MM 20YY. You have advised the XXX tax authorities that you are an overseas resident for tax purposes. You have advised relevant financial institutions in XXX of your Australian resident status and Australian tax file number. You report your foreign income in your Australian income tax returns. You lodge your Australian income tax returns as a resident. You purchased a property at XX XX, XX, XX, XX on DD MM 20YY. The property is less than 2 hectares. You moved into the property on settlement. You are the sole owner of the property. You lived at the property continuously until your departure for Australia in MM 20YY apart from short stays at your parent's home to move, store and dispose of your belongings between MM and MM 20YY. Your sibling also resided at the property from MM 20YY until MM 20YY. Your sibling did not pay you any rent or board. The property was left vacant from MM 20YY. The property was rented from DD MM 20YY until its sale. The property was sold on DD MM 20YY. You do not own any property in Australia. Your spouse owns three investment properties in Australia. Neither you nor your spouse have ever lived at any of these properties. The properties have always been used to produce income. Your spouse has not claimed the main residence exemption on any property. You will make the absence choice in relation to the dwelling in XX, XX for the period after you moved out and relocated to Australia until the sale of the property. You have not claimed the main residence exemption on any other property.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-110 | Income Tax Assessment Act 1997 section 118-130 | Income Tax Assessment Act 1997 section 118-135 | Income Tax Assessment Act 1997 section 118-145 | Income Tax Assessment Act 1997 section 118-185 | Income Tax Assessment Act 1997 subsection 768-995 | Income Tax Assessment Act 1997 subsection 855-15 | Income Tax Assessment Act 1997 subsection 855-45 | Income Tax Assessment Act 1997 section 995-1