MAIN RESIDENCE EXEMPTION
Have you sold your home or looking at selling your home and unsure of the tax consequences? Can the main residence exemption be applied to reduce and/or remove the Capital Gains Tax on the sale?
What is it?
The main residence exemption applies to a taxpayer’s dwelling that was owned by an individual/s and nominated as the taxpayer’s main residence.
What is a dwelling?
A dwelling for the purposes of the main residence exemption is anything that is mainly used as residential accommodation. These can include:
• A house, duplex or cottage
• An apartment, flat or townhouse
• A strata title unit
• A unit in a retirement village
• A caravan, houseboat or other mobile home
What factors determine your main residence for tax purposes?
The following factors are used by the ATO to determine if your dwelling is exempt from CGT under the Main residence exemption:
1. Length of time – there is no legislation to determine a minimum amount of time a person has to live in a dwelling before it is considered to be their main residence
2. Where the family resides – Including your spouse and dependents
3. Where your personal belongings are stored – These include items that assist your routine day to day living habits
4. Your postal address for mail delivery – Including Medicare and bank institutions
5. Your address on the electoral roll
6. The connection of services & utilities – Including usage of electricity, gas and water
7. Your intention of occupying the dwelling – a mere intention of occupying a dwelling as a main residence is not sufficient to obtain the main residence exemption. You must physically occupy the dwelling
All factors are considered in the determination of your main residence.
If the dwelling sold was used for income producing purposes during the ownership period,
it may be partially subject to CGT.
If you are unsure whether the sale of your home is exempt from capital gains tax using the main residence exemption rules give us a call on 08 6267 2200 for advice tailored to you.
ANDREA ALLEN – ACCOUNTANT
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