Private ruling: CGT - main residence - two units of accommodation - disposal
Published: March 2014
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a full main residence exemption on the disposal of two dwellings both used as your main residence? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 102-5 | Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 118-110 | Income Tax Assessment Act 1997 Section 118-115

Reasons for decision: Summary: Taxation Determination TD 1999/69 considers the situation where more than one unit of accommodation can constitute a dwelling for the purposes of the main residence exemption. TD 1999/69 states that whether two or more units of accommodation are used together as one place of residence, for the purposes of the term dwelling as defined in section 118-115 of the ITAA 1997, is a question of fact that depends on the particular circumstances of each case. Factors that are relevant in considering each case include: (a) whether the occupants sleep, eat and live in them (b) the distance between and the proximity of the units of accommodation (c) whether the units are connected (d) whether the units are capable of being sold separately (e) the extent to which the daily activities of the occupants in the units are integrated (f) how the units are shared by the occupants, and (g) how costs of the units are shared by the occupants. In your situation, you own two units that have been combined into one dwelling. You installed an internal door so that you could easily access both units. Generally, where two units of accommodation are treated as a dwelling for the purposes of section 118-110 of the ITAA 1997 and provided they are disposed of as the result of one CGT event, any capital gain on the sale of the two units of accommodation is disregarded.

Relevant facts: You purchased a unit (unit A) which is located on the ground floor. | After a number of years, you purchased the adjoining unit (unit B). | You adapted the apartments by installing an internal door between the two units, so that you could easily access both apartments. | You prepared your meals in one of the apartments kitchens. | You slept in the other apartment as the main bedroom in this apartment is larger. | You used both apartments as your main residence | You listed the properties for sale and have recently sold the properties to a single purchaser with the contracts for sale settling on the same day. | You have made a capital gain.