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Edited version of private ruling
Authorisation Number: 1011582723563
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Subject: CGT - Main residence exemption
Ruling
Question
If you purchase a new property in Australia, will the six year continuing main residence status apply?
Answer: No.
This ruling applies for the following period
Year ended 30 June 2011
The scheme commenced on
1 July 2010
Relevant facts and circumstances
You are an Australian citizen, but a non-resident for tax purposes.
You are living overseas.
You currently own one property in Australia which you state qualifies as your main residence for capital gains tax purposes.
You do not own any other properties.
You intend to sell your current property in Australia and purchase a new property.
You do not intend to live in the new property but will rent it out.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 118-135.
Income Tax Assessment Act 1997 Section 118-145.
Reasons for decision
Generally, you disregard any capital gain or capital loss that you make on the sale of a property that was your main residence for your entire ownership period.
In some cases, you can choose to continue to treat a property as your main residence even though you no longer live in it. However, you can only make this choice for a property that you have first occupied as your main residence.
Where you use the property to produce income, for example you rent it out, you can choose to treat it as your main residence while you use it for that purpose for a period of up to six years after you stop living in it.
If you are absent more than once during the period that you own the property, the six year maximum period that you can treat it the property as your main residence while you use it to produce income applies separately to each period of absence.
In your situation, as you do not intend to occupy your new property before renting it out, the property cannot be considered as your main residence. Therefore, you will not be entitled to the six year continuing main residence status on the new property for any period that you are absent and using the property to produce income.
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