Private ruling: CGT - cost base and main residence exemption
Date of advice: 21 January 2026
Published: 16 March 2026
Ruling period: 1 July YYYY to 30 June YYYY
Date scheme commenced: DD MM YYYY

Ruling: Q1: Can you include interest costs totalling to $XXX and council rates totalling to $XXX in the cost base for Property 1 per subsection 110-25(4) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. You are able to include council rates and interests costs within the cost base of Property 1 as they form part of the third element of the assets cost base. | Q2: Can you include renovation costs totalling to $XXX in the cost base for Property 1 as per subsection 110-25(5) of the ITAA 1997? | A2: Yes. You are able to include the renovation costs incurred within the cost base of Property 1 as they form part of the fourth element of the assets cost base. | Q3: Can you claim a partial main residence exemption for Property 1 for the period it was your main residence under section 118-185 of the ITAA 1997? | A3: Yes.You are entitled to a partial main residence exemption under section 118-185 for the sale of Property 1 as it was your main residence for part of your ownership period. | Q4: If the answer to question 3 is yes, is the value of non-main residence days equal to XXX and is the value of days in your ownership period XXX under subsection 118-185(2) of the ITAA 1997? | A4: Yes. The value of non-main residence days equal to XXX and, the value of days in your ownership period XXX. | Q5: Was the method used to calculate the capital gain or loss in respect to the Property 1 correctly applied under subsection 118-185(2) of the ITAA 1997? | A5: Yes. The method used to calculate the capital gain or loss in respect to Property 1 was correctly applied. | Q6: Are you eligible for the 50% capital gains tax discount on the capital gain made for Property 1 under subsection 115-25(1) of the ITAA 1997? | A6: Yes. You are eligible for the 50% capital gains tax discount on the capital gain made for Property 1.

Relevant facts and circumstances: 1. You are an Australian resident. 2. Since YYYY, you lived in Property 2. 3. On DD MM YYYY, you purchased Property 1 for $XXX for income producing purposes. 4. You paid $XXX in stamp duty and $XXX in other incidental costs for Property 1. 5. On DD MM YYYY, settlement took place for Property 1 and you immediately rented out the property. During this time, you continued to live in Property 2 and it remained your main residence. 6. On DD MM YYYY, you stopped renting Property 1 and moved into the property with your spouse. Property 1 became your main residence. 7. On DD MM YYYY, you and your spouse purchased Property 3. 8. On DD MM YYYY, you and your spouse immediately moved into Property 3 and it became your main residence. 9. On DD MM YYYY, you sold Property 1 for $XXX. 10. On DD MM YYYY, you paid $XXX in incidental sale costs. 11. From DD MM YYYY to DD MM YYYY, Property 1 remained vacant and was not available for rent or used for any income producing purposes. 12. From DD MM YYYY to DD MM YYYY, you incurred expenses such as mortgage insurance repayments, council rates and repairs and maintenance expenses in relation to Property 1. You claimed a deduction for these expenses because you incurred them during the time the property was rented. 13. From DD MM YYYY to DD MM YYYY, you incurred expenses such as mortgage interest repayments totalling to $XXX and council rates totalling to $XXX. You did not claim a deduction on these expenses as the property was your main residence during this period. 14. From DD MM YYYY to DD MM YYYY, you incurred renovation costs for Property 1: The expenditure totalled $XXX, and you did not claim a deduction for these costs as Property 1 was your main residence during this period. 15. You provided a calculation for your capital gain for Property 1.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 110-25 (1) | Income Tax Assessment Act 1997 section 110-25(4) | Income Tax Assessment Act 1997 section 110-25(5) | Income Tax Assessment Act 1997 subsection 110-40 | Income Tax Assessment Act 1997 section 110-45 | Income Tax Assessment Act 1997 subsection 115-25(1) | Income Tax Assessment Act 1997 section 118-185(1)