Hello,
Can I apply the main residence exemption in the following scenario:
Australian tax residents purchase property to live in as their main residence, they both live in the property for several years until they separate, and the wife moves back to her home country and is no longer an Australian tax resident. They both agree to sell the house, and it is sold within six months of her leaving Australia.
I assume the capital gain exempt for the husband (he has no other main residence at this time).
Is the capital gain exempt for the wife, even though it was sold to a third party and not transferred to the husband (she meets the foreign resident for less than six years test)?
There is no formal agreement in place as the separation was amicable.
If the wife does not get the full main residence exemption, can she get a partial exemption for when she was in Australia? If so is the remaining capital gain calculated on the market value of the property at the time she left Australia or the original cost.
Lastly with regards to the wife, what forms if any does she need to provide to notify the ATO of the main residence full or partial exemption?
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