Private ruling: Main residence exemption
Date of advice: 7 August 2025
Published: 13 October 2025
Ruling period: Year ended XX XXX 20XX.
Date scheme commenced: XX XXX 20XX.

Ruling: Q1: Will you be able to disregard any capital gain made on the sale of your property at Address A under the main residence exemption under section 118-110 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No.

Relevant facts and circumstances: You were born in Country A and are a citizen of both Country A and Australia. You moved to Australia in XXXX. You owned a home at Address A which was your main residence for the whole of your ownership period. In XXX 20XX you listed your home as for sale. On XX XXX 20XX you and your spouse and children moved to Country A to be with family who are experiencing some significant health concerns. On XX XXX 20XX you signed a contract of sale on the property. On XX XXX 20XX settlement took place. Assumption You have accepted the assumption that you are a foreign resident from the date you left Australia.

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

Reasons for decision: Summary: Subsection 118-110(1) of the ITAA 1997 provides that you can disregard a capital gain or capital loss made from a capital gains tax (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 and must not have been used to produce assessable income. Subsection 118-110(3) of the ITAA 1997 however, details that the exemption will not apply where an individual is an excluded foreign resident, or a foreign resident who does not satisfy the life events test. You are an excluded foreign resident, at a particular time, if: (a) you are a foreign resident at that time; and (b) the continuous period ending at that time for which you have been a foreign resident is more than 6 years. The 'life events' test is defined in subsection 118-110(5) of the ITAA 1197: You satisfy the life events test, at the time a CGT event happens, if: (a) the continuous period ending at that time for which you have been a foreign resident is 6 years or less; and (b) you are covered by any of the following subparagraphs: (i) you or your spouse has had a terminal medical condition that existed at any time during that period of foreign residency; (ii) your child has had a terminal medical condition that existed at any time during that period of foreign residency, and that child was under 18 years of age at least one such time; (iii) your spouse, or your child who was under 18 years of age at death, has died during that period of foreign residency; (iv) the CGT event happens because of a matter referred to in a paragraph of subsection 126-5(1) of the ITAA 1997 involving you and your spouse (or former spouse). | Detailed Reasoning - Application to your circumstances: You became a foreign resident for tax purposes when you left Australia for Country A on XX XXX 20XX. As you have been a foreign resident for less than 6 years you are not an excluded foreign resident. However, to be eligible for the main residence exemption and be able to disregard any capital gain made on the sale of your home, you would need to meet the life events test as defined above. You have indicated that none of the events referred to above have happened to you in respect of your spouse or a child of yours under 18 years of age. While other family members are experiencing some significant health issues, there is no discretion within the legislation to expand the life events test to other family members or other types of life events. As you are a foreign resident for tax purposes and you do not meet the life events test, you will be unable to disregard any capital gain made on the sale of your home.