| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your written advice
Authorisation Number: 1012884533488
Date of advice: 24 September 2015
Ruling
Subject: Capital gains tax - main residence exemption
Question
Can you claim the capital gains tax (CGT) main residence exemption for the sale of your property?
Answer
Yes.
This ruling applies for the following period<s>:
Year ending 2016.
The scheme commences on:
1 July 2015
Relevant facts and circumstances
You purchased a property in 20XX and moved into the property in 20XX.
You did not rent out the property between 20XX and 20XX.
You moved for work in 20YY and rented out the property. You did not purchase a new property; you simply rented.
You are now selling your property.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-110,
Income Tax Assessment Act 1997 subsection 118-110(1),
Income Tax Assessment Act 1997 section 118-145 and
Income Tax Assessment Act 1997 subsection 118-145(2).
Reasons for decision
Section 118-100 of the Income Tax Assessment Act 1997 (ITAA 1997) states:
You can ignore a capital gain or capital loss you make from a CGT event that happens to a dwelling that is your main residence.
Under subsection 118-110(1) of the ITAA 1997; you are eligible for the exemption if:
(a) you are an individual; and
(b) the dwelling was your main residence throughout your ownership period; and
(c) the interest did not pass to you as a beneficiary in, and you did not acquire it as a trustee of, the estate of a deceased person.
Section 118-145 of the ITAA 1997 extends the general rule and provides that if a dwelling ceases to be your main residence, you may choose to continue to treat it as your main residence in certain circumstances.
Subsection 118-145(2) of the ITAA 1997 provides that:
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 6 years. You are entitled to another maximum period of 6 years each time the dwelling again becomes and ceases to be your main residence.
Application to your circumstances
Your initial purpose for the property was for a main residence. Although you used the property to produce assessable income after you moved out, the absences rule detailed in Section 118-145 of the ITAA 1997 extends the exemption.
You intend to sell your property in the 2016 year which is within the time frame for the absences rule. You are eligible for the main residence exemption under section 118-100 of the ITAA 1997.