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<\/figure>\n\n\n\nSection 118-140 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that both the old and new dwellings can be treated as the taxpayer\u2019s main residence for the lesser of:<\/p>\n\n\n\n
- The six-month period immediately before the sale of the existing home, or<\/li>
- The period between the purchase of the new home and the sale of the existing home.<\/li><\/ul>\n\n\n\n
So if it takes a taxpayer less than six months to settle on the sale of their original home after having settled on the sale of their new home, then both homes can be treated as the taxpayer\u2019s main residence during this period.<\/p>\n\n\n\n
On the other hand, if more than six months passes between the settlement of the new home and the (later) settlement of the original home, both dwellings will only be treated as a main residence for a maximum period of six months before the settlement on the original home.<\/p>\n\n\n\n
In the latter instance, a partial CGT exemption will apply during the excess period (i.e. after the maximum six months) to either the original or new home. Which of them it is will depend on which did not qualify as the taxpayer\u2019s main residence.<\/p>\n\n\n\n
Other than the fundamental requirement that the new home must become the taxpayer\u2019s main residence, the other two key requirements that must be met for the concession to apply are:<\/p>\n\n\n\n
- The existing home must have been the taxpayer\u2019s main residence for at least 3 of the 12 months before the taxpayer\u2019s \u201cownership interest\u201d in it ends, and<\/li>
- The existing home must not have been used to produce assessable income in any part of that 12- month period when it was not the taxpayer\u2019s main residence.<\/li><\/ul>\n\n\n\n
That said, an absence concession exists that can be used to allow the original home to qualify as a main residence \u2014 including where it may have been rented in that 12-month period. This is because the effect of the absence concession is to continue to \u201ctreat\u201d the original home as the taxpayer\u2019s main residence \u2014 notwithstanding any absence and any income use in this period.<\/p>\n\n\n\n
The example on the following page featuring \u2018Anne\u2019 illustrates how the \u201cabsence concession\u201d can work in conjunction with the \u201cchanging main residence concession\u201d.<\/p>\n\n\n\n
Note that that purchased vacant land or land with a partly constructed building on it can also be treated as the taxpayer\u2019s new home for the purposes of the concession.<\/pre>\n\n\n\n
Example scenario<\/h2>\n\n\n\n
Anne acquired a dwelling on 1 January 2008 where she lived until she went overseas on 1 January 2019. Anne did not rent the home during her absence.<\/p>\n\n\n\n
She acquired another dwelling on 1 February 2020 and moved into that dwelling on her return from overseas on 1 March 2020. Anne disposed of the first dwelling on 1 August 2020.<\/p>\n\n\n\n
The law recognises that Anne continued to treat the first dwelling as her main residence for the period 1 January 2019 until she disposed of it on 1 August 2020.<\/p>\n\n\n\n
In fact, from 1 February 2020 Anne would have been able to treat both dwellings as her main residence for up to six months, ending when she ceased to have an ownership interest in the first dwelling.<\/p>\n\n\n\n
This information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":1,"featured_media":7251,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1692],"tags":[],"class_list":["post-7249","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-personal-tax","masonry-post","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-20"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/posts\/7249","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/comments?post=7249"}],"version-history":[{"count":0,"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/posts\/7249\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/media\/7251"}],"wp:attachment":[{"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/media?parent=7249"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/categories?post=7249"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/tags?post=7249"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}