Edited version of private advice

Authorisation Number: 1051929112402

Date of advice: 2 December 2021

Ruling

Subject: CGT - main residence exemption

Question

Are you eligible for the main residence exemption on disposal of your 50% ownership interest in The Property?

Answer

Yes.

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You purchased a property (Property A). You purchased Property A several years ago as joint tenants, each with an equal ownership interest, with your spouse.

You and your spouse also purchased another property (Property B) several years later and another property (Property C) several years after purchasing Property B.

You and your spouse are both Australian tax residents for all of the periods in the ruling.

You moved into Property A when you purchased it and lived there with family members. You will nominate Property A as your main residence from the time you first moved in to when you dispose of it.

You moved out of Property A several years after purchase and into Property B. You moved to Property B as it was more convenient to commute to work from there.

You leased out Property A for several years.

Property A underwent renovations for several months. Following renovations, you moved back to Property A for several months. You then leased out Property A for several months. During this time, you stayed in a property that you rented from a third party.

You moved back to Property A for several months. Property A was then vacant for several months.

You rented a property from a third party and lived in this property for several months. You then purchased Property C and moved in.

Property B was leased out and continues to be leased out.

You have chosen to treat Property A as your main residence throughout your ownership period. As a result, you cannot treat any other dwelling as your main residence throughout your ownership period of Property A. Because of the recent property boom and uncertainty regarding the economy post COVID, you have decided to dispose of Property A.

You have provided two electricity bills for Property for some of the periods when you had moved out of Property A. You have also provided paid invoices from a removalist for some of the periods when you moved out of Property A.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 104-10

Income Tax Assessment Act 1997 Section 115-25

Income Tax Assessment Act 1997 Section 118-110

Income Tax Assessment Act 1997 Section 118-145

Reasons for decision

Question

Are you eligible for a full main residence exemption on the disposal of your 50% ownership interest in The Property?

Summary

Yes. You have met the requirements for a full main residence exemption on the disposal of your ownership interest in The Property. You are therefore able to claim the full main residence exemption on the disposal of your ownership interest in The Property.

Detailed reasoning

Section 118-110 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that you can disregard a capital gain or capital loss made from a capital gains tax (CGT) event that happens to a dwelling that is your main residence

You can continue to treat a dwelling as your main residence in your absence in accordance with section 118-145 of the ITAA 1997 for a period of up to six years, where the dwelling is used for the purpose of producing assessable income.

If a dwelling ceases to be your main residence more than once during your ownership period, the maximum six-year period can apply in relation to each period of absence. All periods of income producing use during all absences are not aggregated to calculate the six-year period.

However, in order to be able to exempt any further periods of income producing use (in addition to the six-year maximum for the first absence) the dwelling must again become your main residence after each absence. A minimum period is not specified because whether the dwelling again becomes your main residence is a question of fact.

Application to your situation

You have elected to treat Property A as your main residence from the time you acquired your interest in it until the time of disposal. You have re-established Property A as your main residence following each period of absence. Each period of absence has been less than six years.

You have therefore met the requirements for a full main residence exemption on the disposal of your ownership interest in Property A.