Private ruling: main residence
Published: January 2014

Ruling: Is the sale of a dwelling considered to be a Capital gains tax (CGT) event? | Yes. | Are you entitled to the main residence exemption upon disposal of your dwelling? | No. | Year ended 30 June 2013 | You commenced building a new residential property with the intention of moving into the residence with your spouse upon its completion. | Your marriage broke down and you separated. | Building on the property was completed. The property was placed on the market once completed due to the marriage breakdown. As you could not afford to maintain the residence it was rented back to the builders as a display home whilst waiting to be sold. | The property sold. | It was your full intention to move into the property at completion and the property was designed and built to cater for your specific needs. | Income Tax Assessment Act 1997 Section 102-20. | Income Tax Assessment Act 1997 Section 104-10. | Income Tax Assessment Act 1997 Section 118-110. | CGT is the tax you pay on any capital gain you make. You make a capital gain or capital loss as a result of a CGT event (section 102-20 of the Income Tax Assessment Act 1997 (ITA 1997)). | CGT event A1 occurred when you disposed of the dwelling. The time of the event is when you and your spouse entered into the contract for the disposal of dwelling A (section 104-10 of the ITAA 1997). | As a general rule, you can disregard any capital gain or capital loss realised on the disposal of a dwelling that was your main residence (section 118-110 of the ITAA 1997). | To get the full exemption from CGT: | · the dwelling must have been your home for the whole period you owned it; | · the dwelling must not have been used to produce assessable income; or | · any land on which the dwelling is situated must be two hectares or less. | A mere intention to construct a dwelling or to occupy a dwelling as a sole or principle residence, but without actually doing so, is insufficient to obtain the exemption'. | While we appreciate your particular circumstances, the Commissioner has no discretion to disregard any capital gain you and your spouse made on the disposal of dwelling.