Having a different home from your spouse or dependent child
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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 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).
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 you having a different main residence from your spouse or a dependent child for a period.
Example – Spouses with different main residences
Under a contract that was settled on 1 July 1996, Kathy and her spouse Grahame purchased a townhouse where they lived together. Grahame owns 70% of the townhouse while Kathy owns the other 30%.
Under a contract that was settled on 1 August 1998, they purchased a beach house which they own in equal shares. From 1 May 1999, 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 2004. As it is Kathy's home and she owns 50% of it, her share of any capital gain or capital loss is disregarded for the period she and Grahame had different homes (1 May 1999–15 April 2004).
As Grahame did not live in the beach house or nominate it as his main residence when he and Kathy had different homes, his share of any capital gain or capital loss is not ignored for any of the period he owned it.
Grahame and Kathy also sold the townhouse under a contract that was settled on 15 April 2004.
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 $10,000, Grahame's share of the capital gain is $7,000 (reflecting his 70% ownership interest). The portion of the gain that Grahame disregards under the main residence exemption is:
$7,000 × 1,034 days (see note 1) ÷ 2,846 days (see note 2) = $2,543
$7,000 × 50% × 1,812 days (see note 3) ÷ 2,846 days (see note 2) = $2,228
Note 1: townhouse was Grahame's home and he and Kathy did not have different homes
Note 2: total ownership period
Note 3: when Grahame and Kathy had the different homes
The total amount disregarded by Grahame is:
$2,543 + $2,228 = $4,771
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 that time, and owned 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 $10,000 capital gain on the townhouse is $3,000, reflecting her 30% ownership interest. The portion she disregards is:
$3,000 × 1,034 days (see note 4) ÷ 2,846 days (see note 5) = $1,090
Note 4: period before 1 May 1999 when the townhouse was Kathy's home
Note 5: total ownership period
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 that time, and owned her share for at least 12 months, she can use either the indexation or the discount method to calculate her capital gain.
End of example
Last modified: 04 Mar 2016QC 27527
Example - Different main residences
Anna and her spouse Mark jointly purchased a townhouse under a contract that was settled on 5 February 1999 and both lived in it from that date until 29 April 2004, 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'.
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 1999–11 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 2004 and the part that is ignored under the 'moving from one main residence to another' rule.
End of example