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Edited version of private ruling
Authorisation Number: 1011612299107
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Ruling
Subject: Capital gains tax (CGT)
Are you entitled to disregard any capital gain or loss that results from the sale of your investment property?
No.
This ruling applies for the following period
Year ended 30 June 2010
The scheme commenced on
1 July 2009
Relevant facts
You and your then spouse purchased an investment property.
A short time later you and your spouse separated.
As a result of your separation agreement you gained full ownership of the property.
At no stage has the property been your main residence as it has been rented out for the entire period of ownership.
It is your intention to dispose of the property.
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 118-185
Reasons for decision
You can make a capital gain or loss if and only if a CGT event happens to a CGT asset. (section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997)).
Land and buildings are CGT assets.
CGT event A1 occurs when you dispose of an asset to someone else. The time of the event is when you enter into the contract for the disposal of the asset, or if there is no contract, when the change of ownerships (section 104-10 of the ITAA 1997).
Main residence exemption
Generally, you can disregard a capital gain or loss made on the sale of a dwelling that is your main residence if:
· you move into it as soon as practicable after you acquired it
· you have occupied the dwelling as your main residence throughout your ownership period
· the dwelling has not been used to produce assessable income, and
· any land on which the dwelling is situated is two hectares or less.
In your case, you did not move into the property as soon as was practical. The property has been producing assessable for the entire period of ownership and at no stage have you occupied it as your main residence.
Accordingly, you are not entitled to disregard any capital gain or loss that may result from the disposal of the property.
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