Private ruling: Main residence exemption and the absence choice
Date of advice: 2 March 2018
Published: June 2018
Ruling period: Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020
Date scheme commenced: 1 July 2017

Ruling: Q1: Are you entitled to the full main residence exemption for the sale of your dwelling? | A1: Yes

Relevant facts and circumstances: You purchased a dwelling in XXXX (the dwelling). After purchasing the dwelling you carried out improvements to it before moving into it a short time later. After the improvements were completed, you moved immediately into the dwelling as this was the first practicable time available for you to move into the dwelling. You lived in the dwelling from X number of years. From XXXX, you moved out of the dwelling into another house (dwelling 2) to provide care to a parent. In XXXX, your surviving parent transferred ownership interest in dwelling 2 into the names of the children. You acquired your share of the interest in dwelling 2 in XXXX. You continue to reside in dwelling 2. You wish to apply the main residence exemption and treat the dwelling as your main residence from the time of acquiring it until it is sold. You will apply the absence choice and treat the dwelling as your main residence from the time of renting it out until it is sold.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 118-110 | Income Tax Assessment Act 1997 Section 118-145 | Income Tax Assessment Act 1997 Section 118-192

Reasons for decision: Summary: The dwelling was your main residence from the time of acquiring it until you used it to produce assessable income. You have made the choice to treat it as your main from the time you have moved out of the dwelling until it is sold. The absence choice allows you to treat the dwelling as your main residence while it is used for income producing purposes for a period not exceeding 6 years. If you make this choice, you cannot treat any other dwelling as your main residence while you apply this section. If the dwelling remains as a rental property and you sell it after a period exceeding 6 years, you will only be entitled to a partial main residence exemption for the days you have resided in the dwelling and the period in which you applied the absence choice. In this situation the first used to produce income rule would apply and you would be taken to have acquired the dwelling for its market value when you first used it to produce assessable income. | Detailed Reasoning - This ruling applies for the following periods:: Year ending 30 June 2018 Year ending 30 June 2019 Year ending 30 June 2020 | Detailed Reasoning - The scheme commences on:: 1 July 2017 | Detailed Reasoning - Relevant facts and circumstances: You purchased a dwelling in XXXX (the dwelling). After purchasing the dwelling you carried out improvements to it before moving into it a short time later. After the improvements were completed, you moved immediately into the dwelling as this was the first practicable time available for you to move into the dwelling. You lived in the dwelling from X number of years. From XXXX, you moved out of the dwelling into another house (dwelling 2) to provide care to a parent. In XXXX, your surviving parent transferred ownership interest in dwelling 2 into the names of the children. You acquired your share of the interest in dwelling 2 in XXXX. You continue to reside in dwelling 2. You wish to apply the main residence exemption and treat the dwelling as your main residence from the time of acquiring it until it is sold. You will apply the absence choice and treat the dwelling as your main residence from the time of renting it out until it is sold. | Detailed Reasoning - Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-10 Income Tax Assessment Act 1997 Section 118-110 Income Tax Assessment Act 1997 Section 118-145 Income Tax Assessment Act 1997 Section 118-192