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Ruling
Subject: CGT - main residence - absence rule
Questions and answers
Can you elect to treat the property as your main residence using the absence rule?
Yes.
This ruling applies for the following periods:
Year ending 30 June 2013
The scheme commenced on:
1 July 2012
Relevant facts and circumstances
You purchased the property several years ago and lived in it as your main residence.
You rented the property out from for a period of time less than six years.
You then moved back into the property and lived in it as your main residence for a period of time.
In the year ended 30 June 2011, you moved out of the property. It has been rented out since this time.
You now intend to sell the property.
You did not own any other property during the period of ownership of this property.
You did not treat any other property as your main residence during the period of ownership of this property.
Relevant legislative provisions:
Income Tax Assessment Act 1997 Subsection 118-145(2).
Reasons for decision
You can generally claim the main residence exemption to ignore a capital gain or capital loss from a CGT event that happens to your home. To get the exemption, the property must have a dwelling on it and you must have lived in the dwelling.
However, if a dwelling that was your main residence ceases to be your main residence, you may choose to continue to treat it as your main residence. This is known as the absence rule.
In regards to the absence rule, subsection 118-145(2) of the Income Tax Assessment Act 1997 (ITAA 1997) states:
If you use the part of the dwelling that was your main residence for the purpose of producing assessable income, the maximum period that you can treat it as your main residence under this section while you use it for that purpose is six years. You are entitled to another maximum period of six years each time the dwelling again becomes and ceases to be your main residence.
In your case, you have been absent from the property for two periods of less than six years, and in both cases you rented the property out, and treated no other property as your main residence.
Therefore, you meet the requirements of subsection 118-145(2) of the ITAA 1997 and you are entitled to elect to treat the property as your main residence for your entire ownership period.