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Edited version of private ruling
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Ruling
Subject: CGT - Main residence
Question
Do you have to be in Australia for 183 days or more in order for the main residence exemption to apply?
No
This ruling applies for the following period:
Financial year ending 30 June 2011
The scheme commences on:
1 July 2010
Relevant facts and circumstances
You are an Australian resident for taxation purposes.
You exchanged contract for the purchase a property.
Settlement date for the purchase of the property was on xx.
You moved into the property upon settlement of the property.
You are the sole registered owner of the property.
The total land area of the property is less than 1600 square meters.
Your spouse owned another property which you both lived in until you purchased the property in question and moved into in December.
The property that your spouse owned was rented out and sold 7 years from when you purchase the property in question.
During the time your spouse owned both properties, you both nominated the property in question as your main residence.
You have at times been absent from your dwelling for more than 183 days a year.
During the time of your absence, you and your spouse have nominated the property as your main residence and the property has been occupied by family members.
Relevant legislative provisions
Section 104-10 Income Tax Assessment Act 1997
Subdivision 118-B Income Tax Assessment Act 1997
Subsection 118-110(1) Income Tax Assessment Act 1997
Section 118-145 Income Tax Assessment Act 1997
Section 118-140 Income Tax Assessment Act 1997
Reasons for decision
Generally, if you are an individual - not a company or trust, 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.
To get a 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 2 hectares or less.
As per section 118-135 of the Income Tax Assessment Act 1997 (ITAA 1997) a dwelling is considered to be your main residence from the time you acquired your ownership interest in it if you moved into it as soon as practicable after that time. If you purchased the dwelling, this would generally be the date of the settlement of the purchase contract.
Section 118-145 of the ITAA 1997 states that in certain circumstances you may choose to treat a dwelling as your main residence even though you no longer live in it. If you make this choice, you cannot treat any other dwelling as your main residence for that period (except if section 118-140 about changing main residence applies).
If you do not use it to produce income and leave it vacant or as a holiday home, you can choose to treat it as your main residence for an unlimited period after you stop living in it.
If you and your spouse have different homes for a period, you and your spouse must either choose one of the homes as the main residence for both of you for the period or nominate the different homes as your main residences for the period. If you both nominate the same property as your main residence, you will be equally entitled to the main residence exemption. This means that you will have CGT consequences in relation to the property that is not nominated as your main residence.
In your situation you have not resided in the property for 183 days or more in a year. During the time you are overseas, the property is either left vacant or your family live in it. You and your spouse have chosen to nominate the property as your main residence and have no ownership interest in any other property.
Therefore you are able to claim main residence exemption upon the sale of the property that you have nominated as your main residence.