Will the main residence exemption under section 118-110 of the Income Tax Assessment Act 1997 (ITAA 1997) apply to the disposal of your property (property A)?
Yes. Section 118-110 outlines the conditions under which capital gains or losses from the sale of a dwelling are disregarded for tax purposes, primarily focusing on main residences. The disregard applies unless the dwelling was used for producing assessable income. You made the choice under section 118-145 of the ITAA 1997 to continue to treat property A as your main residence for a period of 6 years from when you stopped living in it and leased it out. The six-year period under section 118-145 of the ITAA 1997 ends for you in XX 20XX. Therefore, as the property settlement will occur within the 6-year period, you are entitled to a full main residence exemption under section 118-110 of the ITAA 1997. This ruling applies for the following period : Year ending 30 June 20XX The scheme commenced on: 1 July 20XX
In XX 20XX you purchased a property (property A). The property size is under 2 hectares. You lived in the property as your main residence from the time of purchase until moving out in XX 20XX. You commenced leasing the property out from XX 20XX. You leased another property which you lived in until jointly purchasing a property (property B) with your spouse in XX 20XX. You and your spouse continue to live in this property since settlement. You have listed property A for sale with a current unconditional offer accepted and settlement occurring on XX/XX/20XX. You will choose property A as your main residence for a period of 6 years after you moved out in XX 20XX. You will not choose any other property as your main residence during this period.
Income Tax Assessment Act 1997 section 118-110 Income Tax Assessment Act 1997 section 118-145 Income Tax Assessment Act 1997 section 118-190