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Edited version of private ruling
Authorisation Number: 1011544164033
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Ruling
Subject: Main residence exemption
Question:
Is any capital gain or capital loss made on the disposal of your property disregarded?
Answer:
Yes.
This ruling applies for the following period
Year ended 30 June 2011
The scheme commenced on
1 July 199X
Relevant Facts and Circumstances
You and your spouse jointly purchased property A some time ago.
Property A was your main residence from the time it was purchased until 200X.
Property A was rented from 200X for two years.
In 200X your spouse was posted to another location for a fixed term appointment.
Whilst living in the other location you and your spouse purchased an investment property and lived in this property.
Later you and your spouse were posted overseas and departed in 200Y and returned in the subsequent year.
Property A continued to be rented during this time.
Upon your return from overseas you have lived in property A.
You have placed property A on the market for auction in the recent year.
You and your spouse have both made the choice to continue to treat property A as your main residence during the periods that you did not live in it, (when it was rented out).
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 102-20,
Income Tax Assessment Act 1997 Section 104-10,
Income Tax Assessment Act 1997 Section 118-110 and
Income Tax Assessment Act 1997 Section 118-145.
Reasons for decision
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
Summary
Any capital gain or capital loss made on the disposal of your property will be disregarded.
Detailed reasoning
You disregard any capital gain or capital loss you make from the sale of a property if:
· the property was your main residence for the whole of your ownership period;
· you did not earn assessable income from the property whilst you lived there;
· you did not choose to treat any other property as your main residence during any part of your ownership period; and
· the property is less than two hectares in size.
When a property that was your main residence ceases to be your main residence, you may choose to continue to treat it as your main residence even though you no longer live in it.
If you rent out the property, you can choose to treat it as your main residence for a maximum period of up to six years after you cease living there.
In your case, property A was your actual main residence from the time it was purchased until the time it first became available for rent. During the rental periods you and your spouse have both made the choice to continue to treat property A as your main residence (absence choice). You have rented the property out for a period of less than six years. The period covered by either the absence choice or the period that you actually resided at property A covers your entire ownership period. Therefore any capital gain or capital loss that you make on the sale of the property will be disregarded.
Note : When you make the absence choice, for CGT purposes you cannot treat any other property as your main residence for the same period.
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