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Edited version of private ruling
Authorisation Number: 1011836031990
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Ruling
Subject: Capital gains tax - main residence
Question
Can you choose to continue to treat a dwelling as your main residence during the time you have moved out and is used to produce income?
Answers
Yes.
This ruling applies for the following period
Year ended 30 June 2011.
Year ended 30 June 2012.
The scheme commenced on
1 July 2010.
Relevant facts
You own a dwelling that is your main residence.
You and your family will be moving out of this dwelling for several years.
While you and your family are living elsewhere, the dwelling will be rented out.
You will be returning to the dwelling after several years.
Relevant legislative provisions
Income Tax Assessment Act Section 118-110
Income Tax Assessment Act Section 118-145
Reasons for decision
Main residence exemption
Generally, you can ignore a capital gain or capital loss from a CGT event that happens to a dwelling that is your main residence. However in order to obtain the full exemption from CGT, the dwelling must have been your main residence for the entire period you owned it.
Continuing main residence status after a dwelling ceases to be your main residence
In some cases, you can choose to continue to have a dwelling treated as your main residence even though you no longer live in it. You can only make this choice for a dwelling that you have first occupied as your main residence.
If you do not use the dwelling to produce income, you can continue to treat the dwelling as your main residence for an unlimited period after you cease living in it.
Where you use the dwelling to produce income, you can choose to continue to treat it as your main residence while you use it for that purpose for up to 6 years each time the dwelling again becomes, and then ceases to be, your main residence.
If you make this choice you cannot treat any other dwelling as your main residence for that period (except in limited circumstances when moving from one main residence to another).
In this case, you and your family will be moving out of your main residence for several years. The dwelling will be rented out during this time. As the dwelling will be used to produce income, you can choose to continue to treat the dwelling as your main residence for up to six years after you have moved out.
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