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Edited version of private advice
Authorisation Number: 1051846140511
Date of advice: 11 June 2021
Ruling
Subject: CGT main residence exemption - foreign dwelling
Question
Are you entitled to the capital gains tax main residence exemption so that the capital gain made on the sale of the foreign dwelling can be disregarded?
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 while you use it for that purpose is six years. Taxation Determination TD 95/7 confirms that subsection 855-45(3) of the ITAA 1997 does not prevent a taxpayer from making a choice that section 118-145 of the ITAA 1997 applies to a foreign dwelling that the taxpayer owned before becoming a tax resident of Australia.
This ruling applies for the following period periods:
Year ending 30 June 20XX
Year ending 30 June 20X
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You own a dwelling in a foreign country (the dwelling).
You purchased the dwelling while you were a resident of the foreign country and lived in the dwelling as your main residence.
You relocated to Australia several years ago and became a tax resident of Australia at that time.
Upon taking up residency in Australia, you rented the dwelling out.
You live in a rental property in Australia and do not own any real property here.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-145
Income Tax Assessment Act 1997 subsection 118-145(2)
Income Tax Assessment Act 1997 subsection 855-45(3)