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Edited version of private ruling
Authorisation Number: 1011842973732
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Ruling
Subject: Capital gains tax - main residence and absence choice
Question: Is there a specific length of time you need to live in your main residence after a period of absence before you can make another absence choice upon moving out?
Answer: No.
This ruling applies for the following period:
Year ended 30 June 2012
The scheme commenced on:
1 July 2011
Relevant facts
You built a dwelling and you immediately moved in and established it as your main residence.
You lived in this dwelling for several years.
After losing your sight you moved into your carer's dwelling in Melbourne.
You have rented out your dwelling out for a period of just over five years.
You intend to move back into your dwelling and re-establish it as your main residence.
You may need to move back into your carer's dwelling.
You intend to rent out your dwelling again for another period of time.
You have elected to continue to treat this dwelling as your main residence during any period of absence.
You hope to eventually with the medical advances being made in restoring eyesight that you can return to your main residence permanently.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 118-110
Income Tax Assessment Act 1997 Section 118-145
Reasons for decision
Main residence exemption
Generally, you ignore a capital gain or capital loss from a capital gains tax (CGT) event that happens to your ownership interest in a dwelling that is your main residence.
To get the full exemption from CGT:
§ the dwelling must have been your home for your of whole ownership period;
§ you must not have used the dwelling to produce assessable income; and
§ any land on which the dwelling is situated must be two hectares or less.
Continuing main residence status after dwelling ceases to be your main residence
In some cases you can choose to have a dwelling to continue to be 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 six years after you cease living in it. You are entitled to another maximum period of six 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.
There is no specified timeframe as to how long you must live in the dwelling after moving back into it. We take into consideration the following facts when determining if a dwelling is your main residence:
§ the length of time you live there - there is no minimum time a person has to live in a dwelling before it is considered to be their main residence
§ whether your family lives there
§ whether you have moved your personal belongings into the dwelling
§ the address to which your mail is delivered
§ your address on the electoral roll
§ the connection of services ( for example, phone, gas or electricity)
§ your intention in occupying the dwelling.
Therefore, if you move back into your dwelling, re-establish it as your main residence and then you move out and use it to produce assessable income, you will be able to choose to continue to treat the dwelling as your main residence for a maximum period of six years.
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