Edited version of private advice

Authorisation Number: 1052352385185

Date of advice: 22 January 2025

Ruling

Subject: CGT - main residence exemption

Question 1

If you sell Lot X and Lot X at the same time, are you eligible for the full main residence exemption in accordance with Subdivision 118-B of the Income Tax Assessment Act 1997 (ITAA 1997), on the sale of Lot X and Lot X?

Answer 1

Yes.

Based on the nature of your usage and the Commissioner's view of the definition of 'dwelling' contained in Taxation Determination TD 1999/69 Income tax: capital gains: can the term 'dwelling' as defined in section 118-115 of the Income Tax Assessment Act 1997 include ore than one unit of accommodation?, the Commissioner is satisfied that the two properties (Lot X and Lot X) have been used together as a single dwelling and you are therefore eligible for the full main residence exemption on the sale of the property.

Question 2

If you amalgamate Lot X and Lot X into a single title, can you claim the full main residence exemption in accordance with Subdivision 118-B of the ITAA 1997, on the sale of the amalgamated property?

Answer 2

Yes.

The consolidation of the titles does not result in a CGT event (subsection 112-25(4) of the ITAA 1997). Based on the nature of your usage and the Commissioner's view of the definition of 'dwelling' contained in TD 1999/69, the Commissioner is satisfied that the two properties have been used together as a single dwelling and you are therefore, if you amalgamate the titles to Lot X and Lot X, you are eligible for the full main residence on the sale of the property.

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

On XX XX 20XX, previous owners subdivided their land and created the following properties:

1.            Lot X

2.            Lot X

Both Lot X and Lot X contain a separate dwelling and separate titles.

On XX XX 20XX, your partner (Person B) purchased Lot X.

On XX XX 20XX, the purchase of Lot X settled, Person B and their ex-spouse were listed on the property Title.

Despite being registered on the Lot X Title, Person B's ex-spouse never lived in Lot X, only Person B moved into Lot X as his main residence.

In XX 20XX, Person B became the sole owner of Lot X with the removal of their ex-spouse from the Title Deed.

On XX XX 20XX, you moved into Lot X. Lot X remained in Person B's name.

On XX XX 20XX, you purchased Lot X.

On XX XX 20XX, the purchase of Lot X settled.

On the purchase of Lot X, you and Person B had the intention to eventually move out of Lot X to live in Lot X because:

•                     All bedrooms and bathrooms (other than one small guest bathroom) in Lot X are located upstairs.

•                     Prior to Lot X's purchase, Person B broke a bone in their leg. This made travelling upstairs inconvenient and made you and Person B realise the eventual need to 'future-proof' your home when you could no longer manage stairs; and

•                     The house on Lot X is a single-story house.

From the date of purchase, you always intended to consolidate the titles on Lot X and Lot X, but never got around to it.

When you took possession of Lot X, you and Person B furnished Lot X to be a continuation of Lot X.

The week you took possession of Lot X, you removed the wall separating Lot X and Lot X and repaved the driveways for Lot X and Lot X to be of consistent height and the same pebble-mix surface.

After settlement of Lot X, you continued to reside in Lot X with Person B, and you moved your furniture and clothes to Lot X.

Lot X was registered as your principal place of residence and address with the Australian Electoral Commission.

Following the purchase of Lot X, you undertook the following:

•                     You and Person B continued to reside in Lot X

•                     Lot X was utilised to XX

•                     Renovated the Lot X

•                     You and Person B primarily worked from home, one day every week, you both moved to work from the house on Lot X while Lot X was cleaned

•                     Used the area between the houses on Lot X and Lot X as your outdoor entertainment area.

•                     In 20XX, you installed a swimming pool on Lot X

•                     Lot 2 was used to house and garage storage items

•                     In 20XX, you and Person B briefly stayed in the house on Lot X when heating in the house on Lot X needed replacing

•                     In 20XX, Person B left their employment premises and used Lot X to store work items.

•                     Lot X was also used for visiting friends and family to reside in.

The hot water system for Lot X is only accessible from the driveway of Lot X.

At no point was Lot X or Lot X used to earn assessable income.

You and Person B jointly contributed to expenses and outgoings for Lot X and Lot X.

On XX XX 20XX, Person B (the Deceased) passed away and left a Will, bequeathing the whole of his real and personal estate to you.

Lot X passed to you as the beneficiary of the Deceased's estate.

You continue to live in Lot X.

You are considering amalgamating the titles for Lot X and Lot X

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 112-25(4)

Income Tax Assessment Act 1997 Subdivision 118-B

Income Tax Assessment Act 1997 section 118-110

Income Tax Assessment Act 1997 section 118-115

Income Tax Assessment Act 1997 section 118-120

Income Tax Assessment Act 1997 section 118-195

Income Tax Assessment Act 1997 section 118-197