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Edited version of private advice
Authorisation Number: 1051882676074
Date of advice: 10 August 2021
Ruling
Subject: CGT - main residence exemption for vacant land
Question
Are you entitled to claim the main residence exemption on the sale of vacant land due to the destruction of the house on your property?
Answer
Yes.
You are entitled to the full main residence exemption. The effect of making the absence choice is that the property continues to be your main residence for capital gains purposes from when you moved out of it until you sold it. As a result, you are able to treat your vacant land as if the dwelling had not been destroyed and were your main residence.
Further information about your home and land after a disaster can be found by searching 'QC 50171' on ato.gov.au
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 the property in XX. You are the sole owner of the property.
You moved into the property as soon as practical and it was your main residence for XX months.
The land adjacent to the house was less than two hectares.
Due to relocating for employment, the property was rented out to tenants for XX years.
You have elected to use the absence choice to treat your house as your main residence for the whole period it was rented out.
A house fire burnt down the property to an extent it was not lawfully occupiable.
The property had asbestos and hazardous material removed XXX months after.
The property was demolished XX years after the house fire.
The vacant land was listed for sale X year and XXX months later with a real estate agent.
You entered into a contract with a potential purchaser. However, the contract of sale was cancelled approximately XX years and XXX months later.
The purchaser requested a discount on the sale price and requested to purchase the rear end of the vacant land.
The vacant land was subdivided into two lots (Lot 1 and Lot 2). You have an intention to sell Lot 1 and retain Lot 2 to build another property to treat as your main residence.
Lot 1 entered into a contract of sale in XX and settlement occurred in XX.
You did not have another main residence for the whole period from when you purchased the property until you sold Lot 1.
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 118-160