Private ruling: Capital gains tax on main residence
Date of advice: 30 November 2018
Published: March 2019
Ruling period: Year ending 30 June 2 019
Date scheme commenced: 1 July 2018

Ruling: Q1: Are you entitled to a capital gains tax main residence exemption? | A1: No


Relevant legislative provisions: Income Tax Assessment Act 118-110 | Income Tax Assessment Act 104-10

Reasons for decision: Summary: A capital gain or capital loss is made when a capital gains tax (CGT) event happens to a CGT asset you own under section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997). The most common event is CGT event A1 which happens under section 104-10 of the ITAA 1997 when a person disposes of a CGT asset to someone else. A capital gain is made if the amount received (called capital proceeds) from the disposal exceeds the cost base (the cost of the asset and certain other costs associated with acquiring, holding and disposing of the asset) of the CGT asset. | Detailed Reasoning - CGT event: If a CGT event involves a contract, the time of the event is when the contract is made, not when it is settled (subsection 100-20(3) of the ITAA 1997). If there is no contract, the time of the event is when the change of ownership occurs. Real estate is a CGT asset. When selling a property, the CGT event occurs at the date of the contract of sale. Generally, you can ignore a capital gain or capital loss from a CGT event that happens to a dwelling that is your main residence (section 118-110 of the 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 the individual lives in the dwelling, the connection of services, mailing address, and whether the individual has moved his personal belongings into the dwelling. A mere intention to occupy a dwelling as your main residence without actually doing so is not sufficient to get the exemption. | Detailed Reasoning - Application to your circumstances:: You never lived in the property and therefore cannot have a main residence exemption on the property. The sale of the property is subject to CGT.

Relevant facts: You purchased a dwelling a number of years ago. | After getting the title of land you entered in to a building contract in 2017. | During the period of purchase and sale of property you resided overseas. | In 2018 you entered into a contract to sell dwelling and land. | Settlement occurred in 2018. | The dwelling was never your main residence as you never lived in the dwelling.