Private ruling: Capital gains tax - main residence exemption
Date of advice: 5 November 2024
Published: 16 December 2024
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to a full Capital gains tax main residence exemption for the property? | A1: Yes. A Capital gains tax (CGT) exemption is available for capital gains and losses from CGT events affecting a dwelling or an ownership interest in it if the dwelling was the main residence of an individual taxpayer during the taxpayer's ownership period under section 118-110 of the Income Tax Assessment Act 1997 . As you are an individual taxpayer, and you have lived in the property for your entire ownership period, you are entitled to a full capital gains tax main residence exemption for this property. Further information about the main residence exemption can be found by searching 'QC 69710' on ato.gov.au

Relevant facts and circumstances: In mid-to-late 20XX you signed a contract to purchase an Australian property (Property A) for $X. Settlement was scheduled for late 20XX. However, the vendor was having issues with their bank, and settlement did not occur. However, the vendor instructed the real estate agent to hand over the keys to you anyway. You moved into Property A the next day. Every few weeks the vendor asked for an extension to the contract through your solicitor. It then became known that the vendor had an appointed Power of Attorney (POA) working with a solicitor. However, the solicitor did not have the last page where the vendor had signed the POA. In early 20XX, you signed a deed of rescission for the original contract for Property A, with the view to enter into a new contract. You then got lawyers involved, and in early 20XX you signed another contract to buy the Property A for $X (a higher amount than the original purchase contract you signed in mid-to-late 20XX). Settlement occurred in early 20XX. Given the stress of the situation, you sold Property A in early-to-mid 20XX for $X. Settlement occurred a few weeks later. You lived in Property A for the entire period you had legal ownership of the property. You lived in another Australian property (Property B) prior to their ownership of the property, and you had to sell Property B to enable the purchase of Property A. There was never a period where you owned any other properties at the time you owned Property A. Therefore, you did not claim a capital gains tax main residence exemption for any other property whilst you owned Property A. You have provided documentary evidence to substantiate that you lived at Property A during the period you had legal ownership of Property A.

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