Income Tax Assessment Act 1997



Division 118 - Exemptions  

Subdivision 118-B - Main residence  

Basic case and concepts

SECTION 118-110   Basic case  

A *capital gain or *capital loss you make from a *CGT event that happens in relation to a *CGT asset that is a *dwelling or your *ownership interest in it is disregarded if:

(a) you are an individual; and

(b) the dwelling was your main residence throughout your *ownership period; and

(c) the interest did not *pass to you as a beneficiary in, and you did not *acquire it as a trustee of, the estate of a deceased person.

Note 1:

You may make a capital gain or capital loss even though you comply with this section if the dwelling was used for the purpose of producing assessable income: see section 118-190 .

Note 2:

There is a separate rule for beneficiaries and trustees of deceased estates: see section 118-195 .

Note 3:

There is a separate rule for a CGT event that is a compulsory acquisition (or similar arrangement) happening to adjacent land but not also to the dwelling itself: see section 118-245 .

Only these *CGT events are relevant:

(a) CGT events A1, B1, C1, C2, E1, E2, F2, K3, K4 and K6 (except one involving the forfeiting of a deposit); and

(b) a CGT event that involves the forfeiting of a deposit as part of an uninterrupted sequence of transactions ending in one of the events specified in paragraph (a) subsequently happening.


The full list of CGT events is in section 104-5 .


However, this section does not apply if, at the time the *CGT event happens, you:

(a) are an *excluded foreign resident; or

(b) are a foreign resident who does not satisfy the *life events test.


You are an excluded foreign resident , at a particular time, if:

(a) you are a foreign resident at that time; and

(b) the continuous period ending at that time for which you have been a foreign resident is more than 6 years.


You satisfy the life events test , at the time a *CGT event happens, if:

(a) the continuous period ending at that time for which you have been a foreign resident is 6 years or less; and

(b) you are covered by any of the following subparagraphs:

(i) you or your *spouse has had a *terminal medical condition that existed at any time during that period of foreign residency;

(ii) your *child has had a terminal medical condition that existed at any time during that period of foreign residency, and that child was under 18 years of age at at least one such time;

(iii) your spouse, or your child who was under 18 years of age at death, has died during that period of foreign residency;

(iv) the CGT event happens because of a matter referred to in a paragraph of subsection 126-5(1) involving you and your spouse (or former spouse).


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