Private ruling: Main residence
Date of advice: 18 May 2026
Published: 3 August 2026
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are the two properties considered to be one dwelling for the purposes of section 118-115 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No.

Relevant facts and circumstances: On XX XX 202X, the deceased passed away. The deceased purchased Property A pre-CGT. Many years later a related entity purchased Property B post CGT. Property A and Property B are adjacent properties. Property B was occupied for a period by Q (one of the deceased's adult children) and Q's family. Subsequently, Property B was occupied for a period by Y (another of the deceased's adult children) and Y's family. From 20XX, Z (another of the deceased's adult children) and Z's family occupied Property B. During the period after Z and Z's family moved into Property B, the deceased and the deceased's spouse each used a room in Property B for recreational purposes and regularly spent time there. In 20XX, Property B was transferred from the related entity to the deceased. Z and Z's family continued to occupy Property B. Z did not pay any rent or outgoings for Property B and was financially dependent on the deceased. The deceased paid all the outgoings for Property B, including rates, insurance and maintenance. A pathway connected Property A and Property B via an opening in the fence. On XX XX 202X, Property B was sold by the deceased to Y to fund the deceased's aged care needs. The deceased maintained ownership of Property A. The deceased used Property B to receive mail and deliveries, and for medical purposes. The deceased suffered from several medical conditions. Z provided support to the deceased at Property A. This included assistance with mobility, medication management and daily health monitoring. Both properties were used by Z, Z's family and the deceased every day. Z and Z's spouse provided the deceased with personal care and would cook and clean at Property A. The children would play in the grounds of Property A and spend time with their grandparent. The deceased slept, ate and was primarily cared for at Property A. Prior to Z moving into Property B, the deceased regularly slept at Property B. The main laundry for both properties was located at Property B. Both properties were used for meal preparation, entertainment and for social activities. Z regularly slept at Property A. Z's spouse occasionally slept at Property A. The deceased regularly walked between the properties and often ate meals outdoors in the backyard of Property B. The deceased's furniture, personal belongings and storage items were in both properties. Property B was never used to generate income. The properties are on separate titles. Their combined land area is less than 2 hectares. The deceased continued to use both properties until they passed away at Property A. Z and Z's spouse used their own vehicles and the deceased's vehicles, and parked them in the driveway of Property A. They would take the deceased and the deceased's spouse for shopping, social and medical appointments prior to their deaths. Z and Z's family continue to reside at Property B and use both properties. Property A has not been sold.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-110 | Income Tax Assessment Act 1997 section 118-115

Reasons for decision: Summary: The main residence exemption under subsection 118-110(1) of the ITAA 1997 may apply to a dwelling, or a taxpayer's ownership interest in it, if the dwelling was the taxpayer's main residence. Subsection 118-115(1) of the ITAA 1997 provides the definition of a dwelling, and this includes: (a) a unit of accommodation that is a building or is contained in a building and which consists wholly or mainly of residential accommodation; (b) a unit of accommodation that is a caravan, houseboat or other mobile home; and (c) any land immediately under the unit of accommodation. Whether a dwelling can include more than one unit of accommodation is considered in Taxation Determination TD 1999/69 Income tax: capital gains: can the term 'dwelling' as defined in section 118-115 of the Income Tax Assessment Act 1997 include more than one unit of accommodation? The term 'dwelling' is defined in the Macquarie Dictionary as 'a place of residence or abode; a house'. In Campbell v O'Sullivan [1947] SASR 195 at 201, May J stated that: '... "dwelling" ordinarily signifies a place of abode or residence, a tenement, habitation, or house, which premises a person or persons are using as a place for sleeping and usually for the provision of some meals.' TD 1999/69 states that a dwelling can include more than one unit of accommodation if the units of accommodation are used together as one place of residence or abode. Paragraph 4 of TD 1999/69 provides that factors relevant in considering whether units of accommodation are used together as one place of residence or abode 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 occupant. | Detailed Reasoning - Application to your circumstances: Although no one factor is determinative in itself, we consider a factor that carries substantial weight is that the properties are capable of being sold separately. They are on separate titles and were designed and built as separate independent residences. They were acquired many years apart by the deceased and were not disposed of together. We acknowledge that the deceased spent time at Property B, and Z and Z's family spent time at Property A. However, we believe that it is accurate to describe Property A as the main residence of the deceased and Property B as the main residence of Z, Z's spouse and their children, with them spending some time in each other's homes. We believe that is a more accurate description than to say that the deceased, Z and Z's family all lived together in both properties as a single residence. Therefore, the properties are not considered one dwelling for the purposes of section 118-115 of the ITAA 1997.