Private ruling: Capital gains tax - main residence, absence choice and spouse with different residence
Published: July 2011
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1:  | A2: 


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 118-110 | Income Tax Assessment Act 1997 Section 118-145 | Income Tax Assessment Act 1997 Section 118-170 | Income Tax Assessment Act 1997 Section 103-25

Reasons for decision: Summary: Main Residence Exemption Generally you ignore a capital gain or capital loss from a CGT event that happens to a dwelling that is your main residence for the entire period you owned it. | Detailed Reasoning - Continuing Main Residence status after dwelling ceases to be your main residence: In some cases, you can choose to have a dwelling treated as your main residence even though you no longer live in it. You can only make this choice for a dwelling that you have first occupied as your main residence. If you use the property to produce income, the maximum amount of time you can continue to treat it as your main residence is six years for each time the dwelling again becomes and ceases to be your main residence. If you do not rent out the property, you can continue to treat it as your main residence indefinitely. If you make this choice, you cannot treat any other property as your main residence for that period. | Detailed Reasoning - Spouse having different main residence: If, during a period a dwelling is your main residence and another dwelling is the main residence of your spouse (except a spouse living permanently separately and apart from you), you and your spouse must either: · choose one of the dwelling as the main residence of both of you for the period, or · nominate the different dwellings as your main residences for that period. There is nothing to prevent either spouse from nominating the other's dwelling as their main residence even though they do not have an ownership interest in that dwelling. | Detailed Reasoning - How this applies to your circumstances: You established property A as your main residence as soon as practicable after settlement and it continued to be your main residence until late 2009. In late 2009, you moved out and entered into a spousal arrangement with person A and property A became a rental property for a period of less than 12 months. You have made the choice to continue to treat property A as your main residence until its disposal in late 2010. As property A has been rented out for less than six years and person A has nominated this property as their main residence from when you and person A entered into your spousal arrangement in late 2009, you are entitled to the full main residence exemption upon its disposal. Therefore, you disregard any capital gain or capital loss made on the disposal of property A.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns. | Subject: Capital gains tax - main residence, absence choice and spouse with different residence: Question 1: Can your spouse treat your dwelling as their main residence without ever residing in the dwelling? | Question 2: : Can you choose to continue to treat your dwelling as your main residence while you use it for income producing purposes for a period of up to six years? | Relevant facts: In late 2004 you acquired a property (property A). | The dwelling is attached to land that is less than two hectares and has been used for private and domestic purposes. | You moved in as soon as practicable and established it as your main residence. | You continued to reside in property A until late 2009. | In late 2009 you moved in with and entered into a spousal relationship with person A. | You rented out property A. | In late 2010 property A was vacated by the tenant and it also stopped being income producing. | Property A was used to produce assessable income for a period of less then 12 months. | In late 2009 you obtained a valuation to determine the market value of property A. | In late 2010, you signed a contract for the disposal property A. | You have chosen to continue to treat property A as your main residence for your period of absence. | At the time of entering into this spousal relationship person A owned a property (property B) which they had established as their main residence. | Property B was purchased by person in late 1999. | The dwelling attached to the land (property B) is less than two hectares and has been used for private and domestic purposes. | Property B has never been used to produce assessable income. | In late person A signed a contract for the disposal of property B. | For the period late 2009 to the disposal of property B, person A has chosen property A as their main residence.