Private ruling: CGT - Partial main residence exemption
Date of advice: 26 August 2025
Published: 27 October 2025
Ruling period: For the income year ending 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Are you eligible to claim a partial main residence exemption on the disposal of your property situated at X (Property A)? | A1: Yes. You are entitled to a partial main residence exemption under section 118-185 of the Income Tax Assessment Act 1997 (ITAA 1997) for Property A. As Property B was your main residence for part of the period you owned Property A, your periods of main residence at the Property A will be taken to include the periods over which you lived at the property, and your periods of ownership for which the 'absence choice' provisions in section 118-145 of the ITAA 1997 apply. Therefore, your non-main residence days in the partial exemption calculation for Property A (section 118-185 of the ITAA 1997) will be equal to the period of time you chose Property B to be your main residence.

Relevant facts and circumstances: On DDMMYYYY X (you) purchased a property with a former spouse (X) as joint tenants situated at X (Property A). For CGT purposes you each held 50% ownership interest. From YYYY to YYYY you resided in Property A as your main residence. From YYYY you first used Property A to produce income and rented the property to tenants until YYYY. From YYYY to YYYY you moved back to Property A as your main residence. From YYYY to YYYY you rented Property A to tenants. Following your relationship breakdown with your spouse X, their 50% ownership interest in Property A was transferred to your then-current spouse Z. On DDMMYYYY you purchased a second property situated at X (Property B). You resided in Property B until DDMMYYYY. You then moved into separate accommodation provided for by your employer until DDMMYYYY. Following this you moved back to the Property A until DDMMYYYY. From DDMMYYYY until late YYYY you rented Property A to tenants. From DDMMYYYY you rented Property B to tenants. You and spouse Z had separated by this time, and sometime in that year they requested that you sell Property B. In a contract dated DDMMYYYY you sold Property B and with the proceeds of sale going to spouse Z as part of your divorce settlement. In your 20YY income tax return you claimed a full capital gains tax exemption on the sale of Property B. Around this time spouse Z transferred their ownership interest in the Property A back to you. From DDMMYYYY you moved back to Property A. In a contract dated DDMMYYYY you sold Property A.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-145 | Income Tax Assessment Act 1997 section 118-185