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Edited version of private ruling
Authorisation Number: 1011611549826
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Ruling
Subject: Capital gains tax (CGT): Main residence exemption
Does your residence qualify for the CGT main residence exemption?
Yes.
Relevant facts
You and your spouse purchased the property as joint tenants.
The property is less than two hectares in size.
At the time of the purchase you resided on a farm that you spouse owns.
You and your spouse began using the property as a residence as soon as practicable following settlement of purchase.
You and your spouse resided at the property part time with family members. Your spouse spends a majority of weekdays on the farm, and you spend a majority of time at the property with family members.
All utilities and bills associated with the property were in your name or your spouse's name.
Your mail is sent to the farm and your electoral roll address is on the farm.
The property has never been rented out or used to produce assessable income and you have not claimed any deductions in relation to ownership of the property.
The property was at all times occupied by you, your spouse or your family members for the entire period of ownership.
You state that the farm on which you and your spouse reside at part time is not a main residence due to its scale and income producing nature.
You disposed of the property.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 102-20
Income Tax Assessment Act 1997 Section 104-10
Income Tax Assessment Act 1997 Section 118-110
Reasons for decision
A capital gain or capital loss needs to be considered when any disposal, sale or transfer of property occurs. For most CGT events the capital gain is the difference between the amounts received on disposal of the asset less what you paid for the asset (cost base). The amount of any capital gain realised forms part of an individual's assessable income for the income year in which the disposal is made.
However, the main residence exemption may apply to disregard any CGT applicable on disposal of the property.
Main residence exemption
Generally, you can disregard a capital gain that you make on the sale of a dwelling that is your main residence for your entire ownership period.
To be eligible for the full main residence exemption you must meet the following criteria:
· you must be an individual
· the dwelling must have been your home for the whole period you owned it
· you must not have used the dwelling to produce income, and
· any land on which the dwelling is situated must be two hectares or less
Whether a dwelling is a taxpayer's principal place of residence is an issue which depends on the facts in each case. Some relevant factors in determining whether a dwelling is your main residence may include, but are not limited to:
· the length of time the taxpayer has lived in the dwelling
· the place of residence of the taxpayers family
· whether the taxpayer has moved his or her personal belongings into the dwelling
· the address to which the taxpayer has his or her mail delivered
· the taxpayers address on the electoral roll
· the connection of services such as telephone, gas and electricity
· the taxpayers intention in occupying the dwelling.
The relevance and weight to be given to each of these or other factors will depend on the circumstances of each particular case.
In your circumstances, you moved into the property as soon as practical after its purchase. Although you and your family resided there on an off, the property was occupied by family members during the entire ownership period and was not used to produce income.
You are therefore able to choose the property as your main residence.
Please note that if you claim the main residence exemption for this property you cannot claim it for any other property during this time.