Private ruling: CGT - main residence
Published: March 2015
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to apply the main residence exemption upon the sale of your property? | A1: No

Relevant facts and circumstances: You built a dwelling in A in 20XX. You intended to move into the property as your main residence once you found suitable employment in A. You state that it has proved extremely difficult to find a job in your field to suit your skillset in the A region. It is approximately a two and a half hour drive from B to A. You rent a house in B where you live and work. You visit the A property on weekends and holidays. You have electricity connected in your name at the A property. Your mailing address is XYZ Street, B. You intend to sell the A property and buy a property in B, which will become your main residence. The A property has never been used to produce assessable income.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-110 | Income Tax Assessment Act 1997 section 118-185 | Income Tax Assessment Act 1997 section 118-190

Reasons for decision: Summary: Generally, you can disregard a capital gain or capital loss from a capital gains tax (CGT) event that happens to a dwelling that is your main residence (section 118-110 of the Income Tax Assessment Act 1997 (ITAA 1997)). However, in order to obtain a full exemption from CGT, the dwelling must have been your main residence for the entire period you owned it (section 118-110 and 118-185 of the ITAA 1997), must not have been used to produce assessable income (section 118-190 of the ITAA 1997) and any land on which the dwelling is situated should not be more than two hectares. Furthermore, for this exemption to apply it must be established that a property is your main residence or home. Whether a dwelling is an individual's principle residence depends on the facts of each case. The factors to be taken into account include: • The length of time you live there - there is no minimum time a person has to live in a home before it is considered to be their main residence • Whether your family lives there • Whether you have moved your personal belongings into the home • The address to which your mail is delivered • Your address on the electoral roll • The connection of services (for example, phone, gas, electricity, internet, pay TV etc) • Your intention in occupying the dwelling. A mere intention to construct or occupy a dwelling as your main residence - without actually doing so - is not sufficient to obtain the exemption. In your case, you intended to move into the A property once you had found suitable work in that area, you have the electricity connected to the property and you visit the A property on weekends and holidays. It is considered that you have never lived in the A property. Since the construction of the A property in 20XX, you have lived in a rented house in B, where you work and where your mail is delivered. As A is two and a half hours drive from B you were only able to visit the A property on weekends and holidays, it therefore would not be considered your home or your main residence. A mere intention to occupy a dwelling as your main residence is not sufficient to obtain the exemption. As the A property is not considered your main residence, you will not be entitled to apply the main residence exemption upon sale of that property.