Private ruling: CGT - main residence exemption
Date of advice: 9 July 2021
Published: September 2021
Ruling period: Year ended 30 June 2021
Date scheme commenced: 1 July 2020

Ruling: Q1: Does section 118-192 of the Income Tax Assessment Act 1997 ( ITAA 1997) apply in relation to unit 1? | A1: Yes. | Q2: Can an election under section 118-145 of the ITAA 1997 be made in relation to unit 2 to keep treating the property as your main residence for up to 6 years? | A2: Yes. Based on the information provided to the Commissioner section 118-192 of the ITAA 1997 applies to unit 1 and substitutes the first element of the cost base to be the market value at the time you and your spouse first used it to produce income. Section 118-145 of the ITAA 1997 will apply to unit 2 if you and your spouse make the election to treat unit 2 as your main residence for up to 6 years as long as you are treating no other dwelling as your main residence for the same period.

Relevant facts and circumstances: You and your spouse purchased the property in the 20XX income year as joint tenants and moved in straight away. There was an existing dwelling (unit 1) on the property which was renovated while waiting for approval to build a second dwelling on the land (unit 2). Construction commenced on unit 2 in XXXX. The land was subdivided in the 20XX income year and you and your spouse occupied unit 1. In the 20XX income year you and your spouse moved into unit 2. In the 20XX income year unit 1 was made available for rent. Market value at this time was around $XXX,000.00. Unit 1 first produced rental income in the 20XX income year. In the 20XX income year you and your spouse moved out of unit 2 and commenced renting another property. You and your spouse are treating unit 2 as your main residence. In the 2021 income year contracts were exchanged for the sale of unit 1 for $XXX,000.00.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 118-145 | Income Tax Assessment Act 1997 Section 118-192


This ruling applies for the following period: