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Edited version of private ruling
Authorisation Number: 1011544472041
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Ruling
Subject: Capital gains tax (CGT)- Main residence - Absence choice
Is any capital gain or capital loss made on the disposal of your property (property A) disregarded?
Yes.
This ruling applies for the following period
Year ended 30 June 2011.
The scheme commenced on
1 July 2010.
Relevant facts and circumstances
You and your spouse jointly purchased a property (property A) after 19 September 1985.
Property A was your main residence from the time it was purchased until about fifteen years later.
Property A was rented for a period of less than six years.
During the time that Property A was rented you were posted interstate for a fixed term appointment.
Whilst interstate you and your spouse purchased an investment property (property B) and lived in this property.
Later you were posted overseas.
Property A was rented out whilst you were overseas.
Upon your return from overseas you have lived in property A as your main residence.
You have placed property A on the market for auction.
You and your spouse have both made the choice to continue to treat the dwelling on property A as your main residence during the periods that you did not live in it, (when it was rented out). These rental periods do not exceed six years.
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
Income Tax Assessment Act 1997 Section 118-145
Summary
Any capital gain or capital loss made on the disposal of your property (property A) 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 1: 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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