| Disclaimer You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private advice
Authorisation Number: 1051823125436
Date of advice: 6 April 2021
Ruling
Subject: CGT cost base - cost of owning dwelling - partial main residence exemption
Question
For the purposes of calculating CGT, where you are not claiming the main residence exemption for a dwelling for your entire ownership period, and where the dwelling was never used to produce income, can you include the costs of owning the dwelling for the entire ownership period in the third element of your cost base?
Answer
Yes. Although you are applying the main residence exemption to part of your ownership period of dwelling A, there is no legislative provision that excludes or requires you to apportion the costs of owning the dwelling relevant to the third element of your cost base under subsection 110-25(4) of the Income Tax Assessment Act 1997 (ITAA 1997). Therefore, the cost of ownership expenses for your entire ownership period that were not deductible can be included in your cost base. Your capital gain is then calculated in accordance with the formula set out in section 118-185 of the ITAA 1997.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You acquired dwelling 'A' in 20XX. You lived in dwelling A for your entire ownership period until you sold it in 20XX. Dwelling A was never used to produce income.
You sold another dwelling, dwelling 'B', during your ownership of dwelling A. You had lived in dwelling B before moving into dwelling A. You applied the absence rule and the main residence exemption to dwelling B.
Because you applied the absence rule and main residence exemption to dwelling B, you have a period where the main residence exemption cannot be claimed on dwelling A.
Relevant legislative provisions
Income Tax Assessment Act 1997 subsection 110-25(4)
Income Tax Assessment Act 1997 section 118-110
Income Tax Assessment Act 1997 section 118-145
Income Tax Assessment Act 1997 section 118-185
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
