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Main Residence Exemption

Main Residence Exemption

  • Tuesday, 25 June 2024 03:55

The main residence exemption needs to be considered in a variety of situations. The Australian Taxation Office (ATO) are seeing issues with non-reporting of a capital gain, loss, or main residence exemption for property sales.

These tips may help:

If you have started earning income from your home, you may need to get a market valuation for capital gains tax (CGT) purposes, particularly if you are renting out some or all of your home or running a business from it.

When renting out a property that is your main residence, you need to consider whether to use the 6-year absence rule when you sell your property. If you choose to use the 6-year absence rule, you need to make this election in your tax return by including the main residence exemption in the CGT section.

The ATO provides information on the ATO Prefiling Report when a client has transferred property. The details of property transfers include the property address, contract date, settlement date and sale price.

You can only have one property as your main residence at a time. The only exception is the 6-month period when you move from one home to another.

If your tax residency in Australia has changed during the year, your CGT obligations may also have changed. If you were not a resident of Australia for tax purposes while you were living in the property, you are unlikely to satisfy the requirements for the main residence exemption.

If you are a foreign resident when a CGT event happens to your residential property in Australia (for example, you sell it), you may not be entitled to claim the main residence exemption.

For more examples and scenarios on the main residence exemption, see the fact sheet about CGT and the main residence exemption, which is part of the 2024 Tax time toolkit for investors.


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