Main residence cap gains tax exemption

Hi all

Can someone knowledgeable tell me how long I need to live in a PPOR before I can sell it without incurring cap gains tax? E.g. occupied a residence in the middle of 2020 and always lived there. Intending to sell early 2022.
Will I incurr cap gains? I heard I need to be living there for 12 months as a rule of thumb?

 

Don't believe all that you hear - plenty of threads to check.

 

1 day potentially enough but that alone doesn’t mean it will be exempt

 

This article says 2 years: How Long Do You Have To Live In A House To Avoid Capital Gains Tax?
True?

 

Apparently, this mob knows a thing or two as well.

It doesn't mention a minimum period.

However, are you in the business off flipping your properties? Then it's another discussion altogether.

 

Ok. No, not business.

 

That must be the most confusing article ever. It talks about the ato but everything is about US taxes. Filing jointly, exemption up to 500k for cg, quotes some accountant from new york…..

 

If they said that they are either not qualified to advise or don't know much about CGT.

s118-150 ITAA says as little as 3 months is needed, but this is in relation to constructing a main residence and backdating the exemption for up to 4 years.

 

that particular statement made in the article is not accurate.

in PBR 22867 a ONE MONTH period was allowed. It's an old ruling but the law hasn't changed since then.



YEAR(S) OF INCOME TO WHICH THIS RULING APPLIES:

Year ended 30 June 2003

Year ended 30 June 2004

TAX LAW:

Income Tax Assessment Act 1997 Section 118-110.

Income Tax Assessment Act 1997 Section 118-145.

WHAT THIS RULING IS ABOUT:

Can you treat your property as your main residence even though you only lived there for one month?

THE SUBJECT OF THE RULING:

You purchased a property in October 2001 with the intention of living in it as your main residence.

One month later, your mother became ill and you moved out of the property to care for her.

The property is currently being rented out.

You have also purchased a property 'off the plan' which is due to be completed in 12 months time. You do not consider that this property will be your main residence.

COMMENCEMENT OF ARRANGEMENT:

During financial year ended 30 June 2002

RULING:

Can you treat your property as your main residence even though you only lived there for one month?

Yes

EXPLANATION: (This does not form part of the Notice of Private Ruling)

Main Residence Exemption

In some cases you can choose to have a dwelling treated as your main residence even though you no longer live in it. However you cannot make this choice for a dwelling that you have not first occupied as your main residence.

Taxation Determination TD 51 lists the factors (although not exhaustive) you need to take into account in working out if a property is your main residence:

The length of time you live there
Whether your family lives in the dwelling with you
Whether you have moved your personal belongings into the home
The address to which your mail is delivered
Your address on the electoral roll
The connection of services eg telephone, gas or electricity
Your intention in occupying the dwelling
This Determination further states that the mere intention to occupy a dwelling as a main residence without actually doing so is insufficient to obtain the exemption.

In your situation you have acquired a dwelling in June 2000 and moved into it for one month as your main residence. After that time your mother became ill and you moved out of the dwelling to care for her. The dwelling was established as your main residence for one month and your intention was to occupy the dwelling as your main residence.

Therefore, the dwelling is considered to have been established as your main residence.

A choice is available to continue to treat the dwelling as your main residence even after you move out. This choice needs to be made only for the income year that a CGT event happens to the dwelling i.e. the year in which you sell the dwelling. If you make this choice, you cannot treat any other dwelling as your main residence for that period.

If you do not use the dwelling for the purposes of producing assessable income, you can treat the dwelling as your main residence for an unlimited period after you cease living in it.

If you do use the dwelling to produce income, you can choose to treat it as your main residence while you use it for that purpose for up to six years after you cease living in it. You are entitled to another maximum period of six years each time the dwelling again becomes your main residence.

The six-year period will be calculated from the time the dwelling was being used to produce assessable income. Where the property is available for rent but vacant due to lack of tenants, you are still taken to have been using the property to produce assessable income.

Please refer to the enclosed 'Guide to capital gains tax 2001-02' for more information on main residence and capital gains tax.