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Edited version of private advice
Authorisation Number: 1051802610327
Date of advice: 9 February 2021
Ruling
Subject: Capital gains tax - main residence exemption - absence
Question
Can you disregard your capital gain made on the sale of the property?
Answer
Yes. You can continue to treat your dwelling as your main residence in your absence in accordance with section 118-145 of the Income Tax Assessment Act 1997 (ITAA 1997). Under subsection 118-145(2) of the ITAA 1997, if you use 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. As the property was used for income producing purposes for only two years during your absence, the six year limitation imposed by subsection 118-145(2) of the ITAA 1997 does not apply in your circumstances. Therefore, you are entitled to a full main residence exemption and are able to disregard the capital gain you made on sale of the property in accordance with section 118-110 of the ITAA 1997.
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You purchased a property in 20## with your spouse.
You and your spouse resided in the property and established this as your main residence.
In 20## you moved permanently to #### for work purposes and your employer provided you with accommodation.
Your spouse moved out of the property and it was used for income producing purposes for a period of two years.
Your spouse returned to the property in 20## and continued to reside in the property until it sold in 20##.
You did not treat any other property as your main residence during your period of ownership.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-110
Income Tax Assessment Act 1997 section 118-145