Private ruling: Capital gains tax - main residence exemption
Date of advice: 5 July 2016
Published: August 2016
Ruling period: Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you liable for capital gains tax on the disposal of the property? | A1: Yes.

Relevant facts and circumstances: You purchased a property in the relevant financial year. You have never lived in the property. Unfortunately you were unable to live in the property, due to medical reasons. You rented another house while the property was used to produce assessable income. The property has been used to produce assessable income since the relevant financial year. You now intend to sell the property.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 118-B and | Income Tax Assessment Act 1997 section 118-110.

Reasons for decision: Summary: Section 118-110 of the ITAA 1997 provides that you can disregard a capital gain or capital loss made from a CGT event that happens to a dwelling that is your main residence. To qualify for the full exemption, the dwelling must have been your main residence for the whole period you owned it, the ownership period, and must not have been used to produce assessable income. In determining whether a dwelling is your main residence, the following factors may be relevant: • the length of time the taxpayer has lived in the dwelling • the place of residence of the taxpayers family • whether the taxpayer has moved his or her personal belongings into the dwelling • the address to which the taxpayer has his or her mail delivered • the taxpayers address on the Electoral Roll • the connection of services such as telephone, gas and electricity • the taxpayers intention in occupying the dwelling A mere intention to occupy a dwelling as your main residence without actually doing so is not sufficient to get the exemption. In your circumstances, you have never resided in the property and you used the property to produce assessable income for several years. Therefore it would be considered that the property is not your main residence and you would not be eligible for the main residence exemption on disposal of the property.