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Edited version of private ruling
Authorisation Number: 1011909642774
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Ruling
Subject: CGT - Main residence exemption
Question and Answer
Is the capital gain you made on the disposal of dwelling A disregarded?
Yes
This ruling applies for the following period:
Year ended 30 June 2011
The scheme commenced on:
1 July 2010
Relevant facts and circumstances
You acquired dwelling A during the 2000 income year and lived in it as soon as practicable.
You later acquired dwelling B and moved out of dwelling A in the 2008 income year and lived in dwelling B as soon as practicable.
You rented out dwelling A between the 2008 and 2011 income years.
You sold dwelling A during the 2011 income year and made a capital gain.
You made an absence choice to continue to treat dwelling A as your main residence after you no longer lived in it.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 118-110
Income Tax Assessment Act 1997 Section 118-145
Income Tax Assessment Act 1997 Section 118-140
Reasons for decision
Generally, you disregard any capital gain or capital loss that you make on the sale of a dwelling that was your main residence for your entire ownership period.
In some cases, you can choose to continue to treat a dwelling as your main residence even though you no longer live in it. You can only make this choice for a dwelling that you have first occupied as your main residence.
Where you use the dwelling to produce income, for example you rent it out; you can choose to treat it as your main residence while you use it for that purpose for a period of up to six years after you stop living in it.
In your case, you moved into dwelling A as soon as practicable after the contract settled. You resided in dwelling A and established it as your main residence. You have chosen to continue to treat dwelling A as your main residence after you moved out of it and commenced renting it out. You have rented dwelling A for a total period that is less than the six year period allowed.
Accordingly, you are entitled to a main residence exemption in respect of dwelling A and any capital gain that you made on its sale is disregarded.
Additional information
Please note as a result of your absence choice in regard to dwelling A you will not get a full main residence exemption on the sale of dwelling B.