Private ruling: Capital gains tax - main residence exemption
Published: March 2012

Ruling: Question and answer | Can you disregard any capital gain or capital loss you make from the sale of your interest in the property? | Yes. | This ruling applies for the following period: | Year ending 30 June 2013 | The scheme commences on: | 1 July 2012

Relevant facts and circumstances: Your parent died a number of years ago and left their house to you and your sibling in equal shares. Your parent had purchased the property some time after 1985 and lived in it as their main residence since that time. The property has been your main residence since your parent's death. You intend to sell your interest in the property during the income year ending 30 June 2013.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 102-20. | Income Tax Assessment Act 1997 Section 104-10. | Income Tax Assessment Act 1997 Section 118-110.

Reasons for decision: Summary: Section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997) states that you make a capital gain or capital loss if and only if a CGT event happens. CGT events are the different types of transactions or happenings which may result in a capital gain or a capital loss. The disposal of a CGT asset is the most common CGT event and is referred to as CGT event A1 (section 104-10 of the ITAA 1997). A taxpayer disposes of a CGT asset if a change of ownership occurs from the taxpayer to another entity. Section 118-110 of the ITAA 1997 provides that you can disregard a capital gain or capital loss made from a CGT event that happens to a dwelling that is your main residence. To qualify for full exemption, the dwelling must have been your main residence for the whole period you owned it, the ownership period, and must not have been used to produce assessable income. In your case CGT event A1 will happen when you sell your interest in the property. As this property has always been used as your main residence, section 118-110 of the ITAA 1997 applies and therefore you can disregard a capital gain or capital loss that you make when you sell your interest in the property.

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