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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your written advice

Authorisation Number: 1012975130211

Date of advice: 25 February 2016

Ruling

Subject: Capital gains tax - Main residence

Question 1

Can you claim the full main residence exemption on your overseas property where both you and your spouse have not claimed another property as your main residence for the same period?

Answer

Yes.

Question 2

Can you claim a partial main residence exemption on your overseas property where your spouse has claimed another property as their main residence for the same period?

Answer

Yes.

This ruling applies for the following periods:

Year ending 30 June 2016

The scheme commences on:

1 July 2015

Relevant facts and circumstances

You wholly owned an overseas property.

You moved to Australia to stay permanently in the 20XX calendar year.

You purchased a property with your spouse as joint tenants in Australia in the 20XX calendar year.

You sold your overseas property in September 20YY.

Relevant legislative provisions

Income Tax Assessment Act 1997 subdivision 118-B,

Income Tax Assessment Act 1997 section 118-140,

Income Tax Assessment Act 1997 section 118-145 and

Income Tax Assessment Act 1997 section 118-170.

Reasons for decision

You are able to claim the main residence exemption for your overseas property, even after you have moved to Australia in certain circumstances.

As a general rule, a dwelling is no longer your main residence once you stop living in it. However under Section 118-145 of the Income Tax Assessment Act 1997 (ITAA 1997) you may choose to have a dwelling treated as your main residence for capital gains tax (CGT) purposes even though you no longer live in it.

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.

Also under section 118-170 of the ITAA 1997, if, during a period, a dwelling is your main residence and another dwelling is the main residence of your spouse, you and your spouse must either:

Where you and your spouse both choose to treat the overseas property as your main residence, the property will be qualify for a full main residence exemption. However, neither you nor your spouse will be unable to claim the main residence exemption for your Australian property for the overlapping ownership period.

Where your spouse chooses to treat the Australian property as his/her main residence for the entire period, you would only be entitled to a partial (50%) main residence exemption for the overlapping ownership period on the disposal of your overseas property.

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