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Edited version of private ruling

Authorisation Number: 1011716132654

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Ruling

Subject: Capital gains tax and the Main Residence exemption

Question

Are you entitled to a full main residence exemption on Property A?

Yes.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 January 2005

Relevant facts

You and your spouse purchased Property A.

At this time, you and your spouse were not married, however, you were married at a later date.

You moved into Property A on the day of settlement.

Property A was your main residence.

Your spouse was transferred interstate for work.

You rented Property A out.

You and your spouse resided in rental accommodation for the first two years whilst interstate until you purchased another property (Property B).

You sold Property A and you are currently in the process of selling Property B.

You have made the choice to continue treating Property A as your main residence for the period that you were living interstate.

This period does not exceed six years.

You are aware that you can only have one main residence at any one time.

Relevant legislative provisions

Section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997)

Section 104-10 of the ITAA 1997

Section 118-110 of the ITAA 1997

Section 118-145 of the ITAA 1997

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. 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.

Where you do not use the dwelling to produce income, you can treat the property as your main residence for an unlimited period after you stop living in it.

In your situation, you have first occupied Property A as your main residence and you have made the choice to continue treating Property A as your main residence for the period that Property A was rented out and you were residing interstate. This period does not exceed six years.

Accordingly, you are entitled to the full main residence exemption on Property A and you will disregard any capital gain or capital loss you make on the sale of Property A.

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