Private ruling: Capital gains tax
Date of advice: 7 April 2022
Published: June 2022
Ruling period: Year ended 30 June 2022
Date scheme commenced: 1 July 2021

Ruling: Q1: Are you subject to capital gains tax (CGT) on the sale of Property A? | A1: No. Based on the information provided to the Commissioner any capital gain that you made on Property A is disregarded. A capital gain or capital loss you make from a CGT event that happens to your main residence is disregarded if it has been your main residence for the whole of your ownership period and you did not use the property for gaining or producing income. If the property was used to produce income an election can be made under section 118-145 of the Income Tax Assessment Act 1997 (ITAA 1997) to treat the property as your main residence for up to six years as long as you had no other main residence for the same period. You and your spouse rented the property out for less than six years, you will both elect to treat the property for the time it was rented out as your main residence and neither of you treated any other property as your main residence for the same period.

Relevant facts and circumstances: You and your spouse purchased a property (Property A) several years ago. You and your spouse moved into dwelling at Property A as soon as practicable. You and your spouse have lived in Property A and treated it as your main residence. You and your spouse have done improvements to Property A over the years. One of you travelled for your work and had a contract you had with the employer extended. You and your spouse decided to purchase an investment property (Property B) in the relevant state. One of you worked from Property B and stayed at it when you were in that state. The other spouse remained living in at Property A until they joined you in the relevant state. You and your spouse decided to rent Property A out. You and your spouse had your mail diverted to Property A and then changed this to have your mail going directly to Property B. You and your spouse stored your belongings from Property A on the property in a locked garage. It was your intention to only rent Property A out for several months and then return to it. You and your spouse decided to sell Property A as your contract was extended for a couple of years. The Property A sold less than six years after you moved out. From the date of purchase, Property A, has been you and your spouse's main residence. From when Property A was first rented until it was sold, you and your spouse elect to treat the property as your main residence. Neither you nor your spouse have treated any other property as a main residence for the same period.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-110 | Income Tax Assessment Act 1997 section 118-145