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  • Part exemption

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention
    Main residence for only part of the period you owned it

    If a CGT event happens in relation to a dwelling you acquired on or after 20 September 1985 and that dwelling was not your main residence for the whole time you owned it, you get only a part exemption.

    The part of the capital gain that is taxable is calculated as follows:

    A × (B ÷ C)

    Where:

    A is total capital gain made from the CGT event

    B is number of days in your ownership period when the dwelling was not your main residence

    C total number of days in your ownership period

    Example: Main residence for part of the ownership period

    Andrew bought a house under a contract that was settled on 1 July 1990 and moved in immediately. On 1 July 1993, he moved out and began to rent out the house. He did not choose to treat the house as his main residence for the period after he moved out, although he could have done this under the continuing main residence status after dwelling ceases to be your main residence rule. The 'home first used to produce income' rule does not apply because Andrew used the home to produce income before 21 August 1996.

    The contract for the sale of the house was settled on 1 July 2002 and Andrew made a capital gain of $10,000. As he is entitled to a part exemption, Andrew's capital gain is reduced as follows:

    $10,000 × (3,288 days ÷ 4,384 days) = $7,500

    As Andrew entered into the contract to acquire the house before 11.45am (by legal time in the ACT) on 21 September 1999 but the CGT event occurred after this date, Andrew can choose to use the discount method or the indexation method to calculate his capital gain.

    End of example

    If a dwelling was not your main residence for the whole time you owned it, some special rules may entitle you to a full exemption or extend the part exemption you would otherwise get. These rules apply to land or a dwelling if:

    Last modified: 25 Feb 2020QC 27448