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INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-1 - CAPITAL GAINS AND LOSSES: GENERAL TOPICS  

Division 118 - Exemptions  

Subdivision 118-B - Main residence  

Partial exemption rules

SECTION 118-185  Partial exemption where dwelling was your main residence during part only of ownership period  

 ITAA 36

118-185(1)  

You get only a partial exemption for a *CGT event that happens in relation to a *dwelling or your *ownership interest in it if:


(a) you are an individual; and


(b) the dwelling was your main residence for part only of your *ownership period; and


(c) the interest did not *pass to you as a beneficiary in, and you did not *acquire it as a trustee of, the estate of a deceased person.

118-185(2)  

You calculate your *capital gain or *capital loss using the formula:
CG or CL amount×    Non-main residence days    
Days in your *ownership period

where:

CG or CL amount is the *capital gain or *capital loss you would have made from the *CGT event apart from this Subdivision.

non-main residence days is the number of days in your *ownership period when the *dwelling was not your main residence.

Note:

The capital gain or loss may be further adjusted if the dwelling was used to produce assessable income: see section 118-190 .

Example:

You bought a house in July 1990 and moved in immediately. In July 1993, you moved out and began to rent it. You sold it in July 2000, making (apart from this Subdivision) a capital gain of $10,000.

You choose to continue to treat the dwelling as your main residence under section 118-145 (about absences) for the first 6 of the 7 years during which you rented the house out.

Under this section, you will be taken to have made a capital gain of:
 $10,000   ×  365  
3,650
=   $1,000 


 



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