Private ruling: Main residence exemption - construction of new dwelling
Date of advice: 18 July 2024
Published: 26 August 2024
Ruling period: 30 June 20XX.
Date scheme commenced: XX 20XX.

Ruling: Q1: Are you entitled to the full main residence exemption under Subdivision 118-B on the sale of property A? | A1: Yes. Reviewing your circumstances with the conditions under section 118 - B of the of theITAA 1997 you have satisfied these conditions. The land and dwelling before construction were used as your main residence and soon as construction was finished, this continued to be your main residence for over the required 3 month period. Therefore, on the sale of your main residence you can disregard any capital gain on the disposal of the dwelling.

Relevant facts and circumstances: On the specified date, you purchased a dwelling located at specified address in Australia for $XXXXXX. The adjacent land to the dwelling was less than 2 hectares. The dwelling was used for main residence purposes between the specified periods. The dwelling and adjacent land was used for private and domestic purposes and not used for income producing activities. The dwelling was demolished and the land subdivided into 2 equal sized lots, where new residential dwellings were constructed one on each lot. On the specified date, settlement occurred for dwelling 2 (property B) and sold for $XXXX, the capital gain on the dwelling was reported in your Income Tax return. You retained occupied dwelling 1 (property A) as your main residence. You have no previous history of developing property in the furtherance of a business and have no intention of developing property in the future. On the specified date, property A will be auctioned for sale with a range sale price of $XXXX to $XXXX. Dwelling 1 will remain your main residence until settlement occurs.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 118-115 | Income Tax Assessment Act 1997 Section 118-120 | Income Tax Assessment Act 1997 Section 118-140 | Income Tax Assessment Act 1997 Section 118-150 | Income Tax Assessment Act 1997 Section 118-185