Income Tax Assessment Act 1997
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Hide history noteSECTION 118-185 Partial exemption where dwelling was your main residence during part only of ownership period 118-185(1)
You get only a partial exemption for a *CGT event that happens in relation to a *dwelling or your *ownership interest in it if:
(a) you are an individual; and
(b) the dwelling was your main residence for part only of your *ownership period; and
(c) the interest did not *pass to you as a beneficiary in, and you did not *acquire it as a trustee of, the estate of a deceased person.
118-185(2)
You calculate your *capital gain or *capital loss using the formula:
| CG or CL amount | × |
Non-main residence days
Days in your *ownership period |
where:
CG or CL amount
is the *capital gain or *capital loss you would have made from the *CGT event apart from this Subdivision.
non-main residence days
is the number of days in your *ownership period when the *dwelling was not your main residence.
Note:
The capital gain or loss may be further adjusted if the dwelling was used to produce assessable income: see section 118-190 .
Example:
You bought a house in July 2020 and moved in immediately. In July 2023, you moved out and began to rent it. You sold it in July 2030, making (apart from this Subdivision) a capital gain of $10,000. At the time you sold the house, you were an Australian resident.
You choose to continue to treat the dwelling as your main residence under section 118-145 (about absences) for the first 6 of the 7 years during which you rented the house out.
Under this section, you will be taken to have made a capital gain of:
$10,000 × 365
3,650= $1,000
118-185(3)
However, this section does not apply if, at the time the *CGT event happens, you:
(a) are an *excluded foreign resident; or
(b) are a foreign resident who does not satisfy the *life events test.
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