Private ruling: CGT main residence
Date of advice: 11 July 2025
Published: 15 September 2025
Ruling period: Year ended 30 June 20YY | Year ending 30 June 20YY
Date scheme commenced: DD MM 20YY

Ruling: Q1: Can I claim the CGT main residence exemption on two adjoining units - used together as my principal place of residence - if they are sold separately to different buyers at different times? | A1: No. You cannot claim then full CGT main residence exemption on both units if they are sold separately, even if they were used together as your main residence | Q2: Does the CGT main residence exemption apply I sell both adjoining units, used as my principal place of residence, in a single transaction to one buyer? | A2: Yes. | Q3: Am I eligible for the CGT main residence exemption if I sell the two adjoining units after occupying them as my principal place of residence for only X weeks? | A3: Yes.

Relevant facts and circumstances: You, as an Australian resident and citizen, purchased the units located at XX XX, XX. You hold separate titles for a X-bedroom unit and a X-bedroom unit, which together comprise a total area of X. You signed the contract in MM 20YY to purchase the units, which were scheduled for completion in MM 20YY; however, the COVID-19 outbreak and subsequent increases in construction costs for the builder, X, caused delays in settlement. In 20YY, you sold your previous home and rented an apartment while awaiting completion of the units; however, due to ongoing construction delays and uncertainty, you purchased a house at XX XX, XX in MM 20YY The units settled on DD MM 20YY-X months later than expected-and you immediately moved in with your children. You began renting out the house at XX. You intended to use both units as your main residence, living in the X-bedroom unit while the children occupied the X-bedroom unit with each unit designated as lounge and dining area to enhance privacy and functionality. You listed X as your address on your driver's license, as including X was not possible, and provided supporting documents including a change of address confirmation from Transport and Main Road and a form submission acknowledgement from the Australian Electoral Commission (AEC). You submitted copies of the most recent electricity and utility bills for both units, each addressed to you. You paid a contract variation of $XX to install interconnecting doors between the units, creating a single functional residence, and provided supporting documents including a 'Special Conditions' agreement and a marked-up floor plan highlighting the installation. You encountered challenges with unit living due to limited space, environmental noise, and the absence of outdoor amenities suitable for pert care. After X weeks, you concluded that unit living does not suit your family or lifestyle, especially after previously living in a house. You listed both units for sale as a combined home, but buyers showed little interest in the configuration. Most preferred to purchase the units separately and requested individual sales. You have not leased either unit for any other purpose since purchasing them. You plan to relocate to X after selling the units.

Relevant legislative provisions: Income Tax Assessment Act 1997 (ITAA 1997) section 118-110 | Income Tax Assessment Act 1997 (ITAA 1997) section 118-115 | Income Tax Assessment Act 1997 (ITAA 1997) section 118-145 | Income Tax Assessment Act 1997 (ITAA 1997) section 108-5

Reasons for decision: Detailed Reasoning - Question 1: Can I claim the CGT main residence exemption on two adjoining units - used together as my principal place of residence - if they are sold separately to different buyers at different times? | Detailed Reasoning - Answer 1: No. You cannot claim then full CGT main residence exemption on both units if they are sold separately, even if they were used together as your main residence. | Detailed Reasoning - Detailed reasoning: Under the Income Tax Assessment Act 1997 (ITAA 1997), the CGT main residence exemption in section 118-110 applies to a dwelling used as your main residence. A dwelling, as defined in section 118-145, includes anything used wholly or mainly for residential accommodation, even if two adjoining units were physically integrated and used together as a single residence, they remain separate CGT assets under section 108-5 if held under separate legal titles. The timing of each sale is critical. If the units are sold during the distinct periods with no overlap in main residence use, section 118-145 does not apply. The exemption cannot be extended to both units solely because they were used together; each sale must be assessed separately. Where the periods overlap, an election may be required to nominate one unit as main residence, and the exemption may not apply to both. | Detailed Reasoning - Question 2: Does the CGT main residence exemption apply I sell both adjoining units, used as my principal place of residence, in a single transaction to one buyer? | Detailed Reasoning - Answer 2: Yes. | Detailed Reasoning - Detailed reasoning: Selling both units in one transaction strengthens the argument that they were used as a single dwelling for CGT purposes. The physical integration and functional use as one home support this under section 118-115 of ITAA 1997. Provided the units were • Used as your main residence • Not used to produce income • Situated on land less 2 hectares You would qualify for full exemption under section 118-110, assuming the sale occurs within 6 years of moving out as per section 118-145 of ITAA 1997. | Detailed Reasoning - Question 3: Am I eligible for the CGT main residence exemption if I sell the two adjoining units after occupying them as my principal place of residence for only X weeks? | Detailed Reasoning - Answer 3: Yes. | Detailed Reasoning - Detailed reasoning: When determining whether a property qualifies as your main residence for CGT purposes, the Commissioner considers your intention, actual use, and occupancy. Although a X-week period of residence is relatively short, your documented intent - such as property modifications, immediate occupation, and absence of income-producing use - strongly supports the position that the units were genuinely used as your main residence. Under section 118-110 of the ITAA 1997, the CGT exemption applies if the dwelling was your main residence during the ownership, and short occupancy alone does not disqualify eligibility. Additionally, section 118-145 permits a property to continue being treated as your main residence for up to six years after vacating, provided it is not used to generate income.