Hi ATO,
I am seeking clarification regarding the capital gains tax (CGT) treatment of a property owned by my client.
My client purchased a residential property in 2013 and used it as his main residence. In 2017, he constructed a granny flat on approximately 10% of the land area and has rented it out through a real estate agent since that time.
In 2022, my client moved to a different city, where he has been renting a unit as his residence. Since moving out, he has rented out both the main dwelling and the granny flat. He is now planning to sell the entire property and would appreciate guidance on the CGT implications.
I would like clarification on the following points:
- Granny Flat
- Should we calculate CGT from 2017 up to 2022 at 10% of total Gain?
- Main Residence
- For the main dwelling, should CGT be calculated for the period from 2022 (when my client moved out and began renting the property) until the date of sale?
- Main Residence Exemption / Six-Year Rule
- Is my client eligible for any full or partial main residence exemption under the CGT provisions, including the absence rule (commonly referred to as the six-year rule), for any of the periods described above?
I would appreciate your guidance on the correct CGT treatment in these circumstances.
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