Edited version of private ruling

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Ruling

Subject: Capital gains tax - main residence

Question 1

Will property A be considered your main residence?

Answers

No.

Question 2

Will property A be exempt from capital gains tax?

Answers

No.

This ruling applies for the following period

Year ended 30 June 2011.

Year ended 30 June 2012.

The scheme commenced on

1 July 2010.

Relevant facts

You purchased property A.

You lived in property A during week days and returned to property B on weekends.

You also returned to property B during school holidays.

Your family remained living in property B.

You retired and returned to live with your family in property B.

Property A has been vacant since returning to property B.

Your clothing and personal belongings were moved between each property on a regular basis.

The address shown on your drivers licence, electoral role and income tax returns is property B.

For the purposes of this ruling you will sell property A.

Relevant legislative provisions

Income Tax Assessment Act Section 118-110

Reasons for decision

Determining whether or not a dwelling is your main residence:

The following factors need to be considered when determining whether or not a dwelling is your main residence:

· 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; and

· the taxpayers intention in occupying the dwelling.

In this case you lived in property A for a number of years and during this time your family remained living in property B. You lived in property A during week days and returned to property B on weekends and school holidays. Your clothing and personal belongings were moved between each property on a regular basis and not kept permanently at property A. The address shown on your drivers licence, electoral role and income tax returns is property B. Based on these facts property A will not be considered your main residence, of the two dwellings that you have lived in, property B is considered to be your main residence.

Main residence exemption:

Generally, you can ignore a capital gain or capital loss from a capital gains tax (CGT) event that happens to a dwelling that is your main residence.

To obtain the full exemption from CGT:

· the dwelling must have been your home for the whole period you owned it.

· the dwelling must not have been used to produce assessable income; and

· the land on which the dwelling is situated must be two hectares or less.

In this case the main residence exemption will not apply as property A is not considered your main residence and therefore will not be exempt from CGT.

Other references

Guide to capital gains tax 2009-10 - NAT 4151