Private ruling: CGT - main residence exemption
Date of advice: 3 October 2024
Published: 11 November 2024
Ruling period: Year ending 30 June 2025
Date scheme commenced: 1 July 2024

Ruling: Q1: Will you be entitled to a CGT exemption on the rebuilt dwelling if you move into it after it is completed and make it your main residence for at least 3 months? | A1: Yes. Based on the information provided to the Commissioner you will not be required to pay any capital gains tax when you sell the rebuilt dwelling. Section 118-150 of the Income Tax Assessment Act 1997 provides that if you build, repair or renovate a dwelling on land in which you have an ownership interest you can choose to apply this Subdivision as if the dwelling that you are building, repairing or renovating on the land were your main residence from the time you acquired the ownership interest. You can make this choice only if the dwelling: • becomes your main residence as soon as practicable after the dwelling is built, repaired or renovated (paragraph 118-150(3)(a) of the ITAA 1997); and • continues to be your main residence for at least 3 months (paragraph 118-150(3)(b) of the ITAA 1997). You initially purchased the property a number of years ago and lived in it as your main residence up until it was destroyed approximately 18 months ago. Construction of the new dwelling will commence in the near future. You will move into the property on completion and live in it as your main residence for at least 3 months prior to the property being sold. As you will meet the requirements of section 118-150 of the ITAA 1997, you will not be required to pay any capital gains tax when the property is sold.

Relevant facts and circumstances: You purchased the property a number of years ago. The dwelling on the property was destroyed approximately 18 months ago. You lived in the property as your main residence from the date you purchased it until it was destroyed. The dwellings on either side of the property were damaged. The insurance company will pay for the construction of a new dwelling on the land. Construction of a new property will commence in the near future and it is anticipated to take a few months to build. You will move into the newly constructed dwelling once completed and live in it as your main residence for at least 3 months. You will subsequently sell the property to pay compensation to the home owners whose properties were damaged.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-150