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Edited version of your private ruling
Authorisation Number: 1012437555809
Ruling
Subject: Capital gains tax - disposal of main residence
Question:
Is the capital gain or capital loss made on the disposal of property B disregarded?
Answer:
Yes.
This ruling applies for the following period
Year ended 30 June 2011
The scheme commenced on
1 July 2010
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
After 20 September 1985, you and your spouse purchased a 50% interest in a property (property A) with a family member.
The land attached to the dwelling on property A is less than two hectares
A number of years later you and your spouse purchased another property (property B).
The land attached to the dwelling on property B is less than two hectares.
Property B was you and your spouse's main residence for your entire ownership period.
More than ten years ago you and your spouse acquired the 50% interest in property A from the family member.
Approximately two years ago you disposed of property B.
You and your spouse moved into property A upon the disposal of property B.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 104-10 and
Income Tax Assessment Act 1997 Section 118-110.
Reasons for decision
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
The most common capital gains tax (CGT), CGT event A1 happens when you dispose of a CGT asset. The time of the event is when you enter into the contract for its disposal or if there is no contract when the change of ownership occurs.
CGT event A1 occurred when you and your spouse disposed of property B.
Generally, 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 the 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 two hectares or less.
In your case, you and your spouse meet all of the above conditions.
Therefore, any capital gain or capital loss made on the disposal of property B is disregarded.