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Edited version of your written advice
Authorisation Number: 1012922925571
Date of advice: 10 December 2015
Ruling
Subject: CGT - Main residence - absence choice
Question
Is any capital gain or loss you made on the sale of Property A disregarded?
Answer
No.
This ruling applies for the following period:
Year ended 30 June 2015
The scheme commences on:
After 20 September 1985
Relevant facts and circumstances
You bought Property A in 19XX and lived in it until you moved out in 19XX.
From 19XX until 20XX you stayed in Property A intermittently which was 2 or more times per year.
You never rented out Property A.
You sold Property A in 20XX.
The land on which Property A is situated is less than two hectares.
You bought another property, Property B in 19XX and lived in it until you sold it in 20XX.
You bought a house, Property C in 20XX and lived in it until you sold it in 20XX.
You bought another property, Property D in 20XX and currently live in it.
You did not declare any capital gains made on the sale of properties B and C.
For the purpose of this ruling you treated properties B and C as your main residence for the whole of each ownership period and claimed a full exemption in respect of both.
Relevant legislative provisions
Income Tax Assessment Act 1997 Part 3-1
Reasons for decision
Summary
Any capital gain or loss you made on the sale of Property A is not disregarded.
Detailed reasoning
Generally, you can ignore a capital gain or capital loss from a CGT event that happens to your ownership interest in a dwelling that is your main residence (also referred to as 'your home').
To get the full exemption from CGT:
• the dwelling must have been your home for the whole period you owned it
• 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.
You may get only a partial exemption if:
• the dwelling was your main residence during only part of the period you owned it
• you used the dwelling to produce assessable income, or
• the land on which the dwelling is situated is more than two hectares.
In some cases, you can choose to treat a dwelling as your main residence even though you no longer live in it (also referred to as an 'absence choice').
This choice needs to be made only for the income year that the CGT event happens to the dwelling, for example, the year that you enter into a contract to sell it. If you own both:
• the dwelling that you can choose to treat as your main residence after you no longer live in it, and
• the dwelling you actually lived in during that period
you make the choice for the income year you enter into the contract to sell the first of those dwellings. If you make this choice, you cannot treat any other dwelling as your main residence for that period.
In your case, we considered the following:
• you sold properties B and C before you sold Property A.
• you entered into contracts to sell Property B in 20XX and Property C in 20XX.
• you did not include any capital gains in your 20XX and 20XX income tax returns
• you have chosen to treat properties B and C as your main residence for the whole of each ownership period.
As you treated properties B and C as your main residence when you sold them you are unable to make an absence choice in regard to Property A. Therefore, you cannot disregard any capital gain or loss made on its sale.
As you lived in Property A for a number of years you will get a partial exemption.
You calculate the part of the capital gain that is taxable as follows:
total capital gain made from the CGT event |
x |
number of days in your ownership |
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