Private ruling: CGT – main residence exemption – two properties
Date of advice: 15 February 2019
Published: May 2019
Ruling period: Year ended 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Are your two properties considered to be one dwelling for the purposes of the main residence exemption? | A1: No

Relevant facts and circumstances: You are the sole owner two properties, property A acquired in 19XX and property C acquired XX May 20XX. Prior to acquiring property C, you owned a property B from 20XX until you disposed of it on XX May 20XX. None of these properties have been used to produce assessable income. Some of your family members lived in the property B prior to its disposal; they now live in property C. Your family members do not pay rent, nor do they contribute to the maintenance or running costs of the property B prior to its disposal, nor property C. You and your spouse ‘split your time’ between the two properties. On average you spent 2-3 days in the property B prior to its disposal and now spend that time at property C. The remaining 4-5 days you spend at property A. You are registered on the electoral role at property A. Your mail is primarily delivered to property A. The property A and property C are approximately XXX km apart. The property A and property B were approximately XXX km apart. You have personal belongings at both properties. The properties are not connected and each of the properties is capable of being sold separately. Assumption(s) None

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-110 | Income Tax Assessment Act 1997 subsection 118-115(1)

Reasons for decision: Summary: You may disregard a capital gain or loss that happens to a capital gains tax (CGT) asset (dwelling) where you are an individual, the dwelling was your main residence throughout the ownership period, and you did not acquire your interest in it as either a beneficiary or the trustee of a deceased estate (section 118-110 Income Tax Assessment Act 1997 (ITAA 1997)). Whether a dwelling is your main residence is a question of fact to be determined in light of the particular circumstances of each case. Except in limited circumstances, you are generally only allowed to treat one dwelling as your main residence at any time. Dwelling The term “dwelling” is defined in subsection 118-115(1) of the ITAA 1997 as a unit of accommodation that is a building, or contained in a building and which consists wholly or mainly of residential accommodation. Taxation Determination 1999/69 (TD 1999/69) considers whether more than one unit of accommodation can constitute a dwelling for the purposes of the main residence exemption. This is possible in circumstances where both units of accommodation are being used together as one place of residence or abode. Whether two or more units of accommodation are used together in this way is a question of fact that depends on the particular circumstances of each case. The factors we will consider in this determination include: ● whether the occupants sleep, eat and live in them; ● the distance between and the proximity of the units of accommodation; ● whether the units are connected; ● whether the units are capable of being sold separately; ● the extent to which the daily activities of the occupants in the units are integrated; ● how the units are shared by the occupants; and ● how costs of the units are shared by the occupants In your case, you acquired the property A in 19XX and lived in it from acquisition. In 20XX you acquired property B. You later disposed of property B and acquired property C. Members of your family lived in property B prior to its disposal, and then moved into property C. You and your spouse ‘split your time’ between the two properties with 4-5 days per week being spent at property A and the remaining time spent at property B prior to its disposal, then the property C. The properties are completely separate self-contained properties that are located more than XXX km apart. The properties are on separate titles and are capable of being sold separately, as evidenced by the sale of property B. Although you and your spouse ‘split your time’ between the two properties, it is not considered that the two properties constitute a dwelling being used together as one place of residence or abode. As the properties are not considered to be one dwelling you are not eligible to claim the main residence exemption on both properties.