If your home is accidentally destroyed and you then dispose of the vacant land on which it was built, you can choose to apply the main residence exemption as if the home had not been destroyed and continued to be your main residence.
You can get a full exemption for the land if you used it solely for private purposes in association with your home and it does not exceed two hectares. You cannot claim the main residence exemption for this period for any other dwelling, except for a limited time if you are changing main residences, see Moving from one main residence to another.
You can only get this exemption where your home was accidentally destroyed. If the destruction of your home is intentional and just after the destruction you sell the vacant block of land, you cannot get the main residence exemption.
If you and a dependent child under 18 years old have different homes for a period, you must choose one of the homes as the main residence for both of you for the period.
If you and your spouse have different homes for a period, you and your spouse must either:
- choose one of the homes as the main residence for both of you for the period, or
- nominate the different homes as your main residences for the period.
If you and your spouse nominate different homes for the period, and you own 50% or less of the home you have nominated, you qualify for an exemption for your share. If you own more than 50%, your share is exempt for half the period you and your spouse had different homes.
The same applies to your spouse. If your spouse owns 50% or less of the home they have nominated, they qualify for an exemption for their share. However, if your spouse owns more than 50% of the home, their share is exempt for only half the period you had different homes.
This rule applies to each home the spouses own, whether they have sole ownership or own the home jointly (either as joint tenants or tenants in common).
Your 'spouse' includes another person (of any sex) who:
- you were in a relationship with that was registered under a prescribed state or territory law
- although not legally married to you, lived with you on a genuine domestic basis in a relationship as a couple.
This rule applies also if you choose to treat a dwelling as your main residence when you no longer live in it, see Continuing main residence status after dwelling ceases to be your main residence, and this choice results in your having a different main residence from your spouse or a dependent child for a period.
For information about when and how you make a choice, see Choices.
Example 82: Spouses with different main residences
Under a contract that was settled on 1 July 1998, Kathy and her spouse Grahame purchased a townhouse, in which they lived together. Grahame owns 70% of the townhouse while Kathy owns the other 30%.
Under a contract that was settled on 1 August 2000, they purchased a beach house, which they own in equal shares. From 1 May 2001, Kathy lives in their beach house while Grahame keeps living in the townhouse. Grahame nominated the townhouse as his main residence and Kathy nominated the beach house as her main residence.
Kathy and Grahame sold the beach house under a contract that was settled on 15 April 2018. As it was Kathy’s main residence and she owned 50% of it, she disregards her share of any capital gain or capital loss for the period she and Grahame had different homes (1 May 2001 to 15 April 2018).
As Grahame did not live in the beach house or nominate it as his main residence when he and Kathy had different homes, he does not ignore his share of any capital gain or capital loss for any of the period he owned it.
Grahame and Kathy also sold the townhouse, under a contract that was settled on 15 April 2018.
Because Grahame owns more than 50% of the townhouse, it is taken to have been his main residence for half of the period when he and Kathy had different homes.
If the total capital gain on the sale of the townhouse is $100,000, Grahame’s share of the capital gain is $70,000 (reflecting his 70% ownership interest). The amount of the gain that Grahame disregards under the main residence exemption is worked out as follows:
$70,000 × (1,036 days [see note 1] ÷ 7,229 days) = $10,032
The total amount disregarded by Grahame is:
$10,032 + $29,989 = $40,021
As Grahame bought the townhouse before 11.45am (by legal time in the ACT) on 21 September 1999 and entered into the contract to sell it after owning his share for at least 12 months, he can use either the indexation or the discount method to calculate his capital gain.
Kathy’s share of the $100,000 capital gain on the townhouse is $30,000, reflecting her 30% ownership interest. The amount she disregards is:
As Kathy entered into the contract to buy the townhouse before 11.45am (by legal time in the ACT) on 21 September 1999 and entered into the contract to sell it after owning her share for at least 12 months, she can use either the discount method to calculate her capital gain or the indexation method.End of example
Example 83: Different main residences
Anna and her spouse, Mark, jointly purchased a townhouse under a contract that was settled on 5 February 1999. They both lived in it from that date until 29 April 2018, when the contract of sale was settled. Anna owned more than 50% of the townhouse.
Before 5 February 1999, Anna had lived alone in her own flat, which she rented out after moving to the townhouse. She then sold her flat and settled the sale on 11 March 2000. Anna chose to treat the flat as her main residence from 5 February 1999 until she sold it under the continuing main residence status after dwelling ceases to be your main residence rule.
Because of Anna’s choice, Mark had a different main residence from Anna for the period 5 February 1999 to 11 March 2000. Therefore, Mark must either:
- treat Anna’s flat as his main residence for that period, or
- nominate the townhouse as his main residence for that period.
If he chooses to treat Anna’s flat as his main residence, a part of any gain Mark makes when he sells the townhouse will be taxable. He will not get an exemption for the townhouse for the period that he nominated Anna’s flat as his main residence (that is, 5 February 1999 to 11 March 2000).
If Mark nominates the townhouse as his main residence, he qualifies for a full exemption on any capital gain he makes when it is sold because he owned 50% or less of it. However, because Mark and Anna have different main residences as a result of Mark’s choice, and Anna owns more than 50% of the flat, her gain on the flat will only qualify for a 50% exemption for the period from 5 February 1999 to 11 March 2000.
Any capital gain Anna makes on the townhouse is taxable, except for the period from 12 March 2000 to 29 April 2018 and the part that is ignored under the moving from one main residence to another rule.End of example