Private ruling: main residence exemption
Published: November 2013
Ruling period: Year ending 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you eligible for the main residence exemption on any capital gain made on the disposal of the property? | A1: 

Relevant facts and circumstances: You acquired a property, with a dwelling. The contract date and settlement date for the acquisition was in the 2012-13 financial year. The dwelling is you main residence. This is the address used for; · your registration on the electoral roll · your driver's licence · your electricity account The property has not been used to earn any income. The area of the property is less than two hectares. You intend on selling the property.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 118-B

Reasons for decision: Detailed Reasoning - Capital gains tax: A capital gain or capital loss is the difference between what it cost you to get an asset and what you received when you disposed of it. You pay tax on your capital gains. It forms part of your income tax and is not considered a separate tax, although it is generally referred to as capital gains tax (CGT). Selling assets such as real estate or shares is the most common way you make a capital gain or capital loss. Some of your main personal assets are exempt from CGT, including your home, car, and most personal use assets, such as furniture. | Detailed Reasoning - Main residence exemption: Subdivision 118-B of the Income Tax Assessment Act 1997 (ITAA 1997) deals with the main residence exemption. It provides that generally, if you are an individual (not a company or trust), you can ignore a capital gain or capital loss from a CGT event that happens to your ownership interest in a dwelling that is your main residence (also referred to as 'your home'). To get the full exemption from CGT: · the dwelling must have been your home for the whole period you owned it · you must not have used the dwelling to produce assessable income, and · any land on which the dwelling is situated must be 2 hectares or less. | Detailed Reasoning - What is a dwelling?: A dwelling is anything that is used wholly or mainly for residential accommodation. Examples of a dwelling are: · a home or cottage · an apartment or flat · a strata title unit · a unit in a retirement village · a caravan, houseboat or other mobile home. | Detailed Reasoning - Is the dwelling your main residence?: The following factors may be relevant in working out whether a dwelling is your main residence: · the length of time you live there - there is no minimum time a person has to live in a home before it is considered to be their main residence · whether your family lives there · whether you have moved your personal belongings into the home · the address to which your mail is delivered · your address on the electoral roll · the connection of services (for example, phone, gas or electricity) · your intention in occupying the dwelling. | Detailed Reasoning - Application to your circumstances: Based on the information provided the property satisfies the conditions necessary to be eligible for the main residence exemption, accordingly, there will be no capital gains tax implications on the disposal of the property.