Private ruling: Sale of property
Date of advice: 4 February 2026
Published: 23 March 2026
Ruling period: 1 July 20ZZ to 30 June 20ZZ
Date scheme commenced: 1 July 20ZZ

Ruling: Q2: Is the sale of the property at YY eligible for the CGT main residence exemption? Summary 2 No. The property was never your main residence.

Relevant facts and circumstances: X purchased a house and land at YY in 20ZZ. X initially intend to live in the property after renovations were undertaken. The settlement date was 20ZZ. X, immediately identified a major problem with the roof and decided to undertake a significant renovation and did not live in the house at any point after that. During the initial renovation, internal structural defects were detected, and X decided to demolish the property and rebuild a new home. The construction started in 20ZZ, and the original completion date was set to be around 20ZZ. During the construction process, there were unexpected price changes due to increasing time and material costs. X had to borrow funds from family and friends to cover the ongoing costs. There was an error made by X's Principal Certifying Authority, which resulted in a long project delay. Also, the interest rates had increased since 20ZZ and X struggled to meet the outgoing costs and considered selling the intended family house after the completion of the construction to meet all their debts. X started marketing for the sale of the new house about 20ZZ and the occupation certificate was granted around 20ZZ. After the construction was finally completed in 20ZZ, X felt they had no choice but to sell the property immediately in order to recover the financial losses and repay the debts incurred during the prolonged construction/renovation period. X has held full-time employment since 20ZZ. The property was renovated with the intention that X would move in when it was completed and not with the intention of a subsequent sale. X, was registered for GST in April 20ZZ for a separate business of consulting services, and this registration and ABN were not related to the construction and renovation project. X held two other properties under his name during the relevant period from 20ZZ to 20ZZ. Both properties are investment properties, and rental incomes were reported in his individual tax returns for the relevant years. X had availability of the property at YY for a few days before the structural defects problem was discovered and decision was made to knock down and rebuild. The property at YY did not become X's primary residence at any time before the construction and renovation project was completed. After the completion on FY20ZZ, the property was sold immediately because X wanted to settle it immediately to meet all their financial obligations that were a direct result of the long and difficult rebuild/renovation project. X did not move into the property after the rebuild and renovation were completed. X did not claim any GST input tax credits in respect of the cost of acquiring, renovating and constructing the property located at YY, and at the time of undertaking the work intended to move into the house when it was complete and ultimately use it as his residence. There was no intention by X to engage in a commercial activity of rebuilding/renovating for future sale.

Relevant legislative provisions: Income Tax Assessment Act 1997 ("ITAA 1997"): Subdivision 118-B - Main residence | A New Tax System (Goods and Services Tax Act): 1999 ("GST Act") - Division 9 - Taxable supplies.

Reasons for decision: Summary: No. The sale of the property was not made in the course or furtherance of an enterprise that you carry on. | Detailed Reasoning - Detailed reasoning: Section 9-5 GST Act provides: 9-5 Taxable supplies You make a taxable supply if: (a) you make the supply for *consideration; and (b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and (c) the supply is *connected with the indirect tax zone; and (d) you are *registered, or *required to be registered. However, the supply is not a * taxable supply to the extent that it is *GST-free or *input taxed. 9-20 Enterprises (1) An enterprise is an activity, or series of activities, done: (a) in the form of a *business; or (b) in the form of an adventure or concern in the nature of trade; or (c) on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property; or (d) by the trustee of a fund that is covered by, or by an authority or institution that is covered by, Subdivision 30-B of the * ITAA 1997 and to which deductible gifts can be made; or (da) by a trustee of a • complying superannuation fund or, if there is no trustee of the fund, by a person who manages the fund; or (e) by a charity; or (f) (Repealed by No 169 of 2012) (g) by the Commonwealth, a State or a Territory, or by a body corporate, or corporation sole, established for a public purpose by or under a law of the Commonwealth, a State or a Territory; or (h) by a trustee of a fund covered by item 2 of the table in section 30-15 of the ITAA 1997 or of a fund that would be covered by that item if it had an ABN. On the facts in the current case, the sale of the property was not an enterprise and therefore not a taxable supply. | Detailed Reasoning - Question 2: Is the sale of the property at YY eligible for the CGT main residence exemption? | Summary: No. The property was never your main residence. | Detailed Reasoning - Detailed reasoning: If you build a dwelling on land you already own, the land normally is not exempt from capital gains tax (CGT) until the dwelling becomes your main residence. The land is not considered your main residence unless you: • have an ownership interest (other than a life interest) in the land • build, repair or renovate a dwelling on the land, or finish a partly constructed dwelling • move into the dwelling as soon as practicable after it is finished and continue to use it as your main residence for at least 3 months Section 118-150 ITAA 1997 provides: SECTION 118-150 If you build, repair or renovate a dwelling 118-150(1) This section applies to land in which you have an *ownership interest (except a life interest) if you build a *dwelling on the land, or repair, renovate or finish building a dwelling on the land. 118-150(2) 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. 118-150(3) You can make the choice only if: (a) a * dwelling on the land that you construct, repair or renovate becomes your main residence (except because of section 118-147 ) as soon as practicable after the work is finished; and (b) it continues to be your main residence for at least 3 months. On the facts in this case, the property was never the main residence of X as the property did not become X's main residence after purchase, and did not become the main residence after completion of the rebuild and renovations.

Question 1: Is the sale of the property at YY subject to GST?