| Disclaimer 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 private advice
Authorisation Number: 1051766951358
Date of advice: 3 November 2020
Ruling
Subject: CGT main residence exemption
Question 1
Are you able to utilise the absence rule in section 118-145 of the Income Tax Assessment Act 1997 (ITAA 1997) to claim a main residence exemption for the period you were not living at the Property?
Answer
Yes.
Question 2
Are you able to claim a full main residence exemption for the period from when you purchased the Property until you moved back there?
Answer
No, however you can claim a partial exemption for the portion of the residence which was not used for income producing purposes prior to you moving out of the Property.
Question 3
Are you able to claim a full main residence exemption from when you moved back into the Property until the Property was sold?
Answer
Yes.
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
XX XXXX 20XX
Relevant facts and circumstances
You purchased the Property on XX XXXX 20XX.
The Property was your main residence from your date of purchase until you moved out on XX XXXX 20XX. During this period you rented out part of the Property.
After you moved out of the Property on XX XXXX 20XX, you continued to rent the Property out.
You ceased renting out the Property when you moved back into it on XX XXXX 20XX.
You sold the Property on XX XXXX 20XX.
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 118-190
Income Tax Assessment Act 1997 subsection 118-190(3)
Reasons for Decision
Once you have established a property as your 'main residence', you can move out and rent out this property for up to six years and still treat this property as your main residence under section 118-145 of the Income Tax Assessment Act 1997 (ITAA 1997).
In your circumstances you lived in the Property as your main residence prior to moving out.
Therefore, you are able to utilise the absence rule and continue to treat the Property as your main residence during the period when you did not reside there.
As per subsection 118-190(3) of the ITAA 1997 you can disregard any use of the property to produce income for the period you are absent from the property, to the extent that any part of it was not used to produce income just before you left the property.
In your circumstances you rented out part of the Property from the day your purchase was settled. As the Property was producing assessable income prior to you moving out, for the period of your absence you will only be entitled to a partial exemption for the portion of the Property which was not used to produce income.
For the period from when you moved back into and stopped receiving income in relation to the Property, up until you sold the Property, the Property was your main residence and not producing any assessable income. Therefore, you are entitled for a full main residence exemption for this period.