Edited version of private advice

Authorisation Number: 1052391394322

Date of advice: 7 May 2025

Ruling

Subject: Capital gains tax

Question 1

Is the sale of X units (the Property), considered a sale of a single dwelling under section 118-115 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer 1

Yes.

The sale of the Property is treated as the sale of a single dwelling as you have sufficiently demonstrated that you used the units of accommodation together as one place of residence.

Question 2

Are you entitled to a partial main residence exemption on disposal of the Property under section 118-185 of the ITAA 1997?

Answer 2

Yes.

You are entitled to a partial main residence exemption on disposal of the Property.

You are not entitled to a full main residence exemption because you didn't move into unit A as soon as practicable.

We note that you chose to continue to treat the Property as your main residence during the periods you were absent from the Property. Therefore, there is no adjustment to your partial exemption for these absence periods.

The capital gain or loss is calculated using the following formula:

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Non-main residence days

Your non-main residence days are calculated from purchase settlement date of unit A to 6 months prior to sale settlement of unit D.

We note that your non-main residence days includes an adjustment for changing main residences as you could treat both units A and D as your main residence for up to 6 months.

Days in your ownership

Your ownership period is the total number of days from the date you owned unit A (purchase settlement date) until the sale settlement of the Property.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

From before XXXX to XXXX, you lived at unit D.

On XXXX, you purchased the unit below you, unit A with an existing lease.

On XXXX, your purchase of unit A settled.

On XXXX, you purchased unit B and left it vacant.

On XXXX, your purchase of unit B settled.

In XXXX, you ended the rental lease at unit A.

You carried out works to combine units A and B to form 1 unit.

On XXXX, your sale of unit D settled.

On XXXX, you moved into the combined units A and B.

You continued works on units A and B while you lived there.

In XXXX, you completed your works on units A and B.

On XXXX, you purchased unit C.

On XXXX, your purchase of unit C settled.

You immediately used unit C as a part of your home together with units A and B.

You purchased units A, B and C on separate titles.

In XXXX, you started the renovation of units A, B and C to combine all 3 units into 1 single unit of accommodation (the Property).

Between XXXX and XXXX, you stayed in temporary rental accommodation while renovating the Property.

In XXX XXXX, you completed the renovation and moved into the Property with your family.

You did not treat any other property as your main residence during this period.

You did not use the Property to produce income during the period you resided there as your main residence.

The additional rooms and space at the Property were at times used for storage and as study rooms for your dependent children.

The Property retained X separate entrances as a requirement of the Strata title.

In XXXX, you vacated the Property due to a marriage breakdown.

Your spouse continued living at the Property until settlement.

In XXXX, you listed the Property for sale.

On XXXX, you sold the Property for $X,XXX,XXX.

On XXXX, your sale of the Property settled.

You chose to continue to treat the Property as your main residence during your periods of absence from the Property including from XXXX to XXXX and from XXXX to XXXX.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-115

Income Tax Assessment Act 1997 section 118-140

Income Tax Assessment Act 1997 section 118-145

Income Tax Assessment Act 1997 section 118-185