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Re: Principal place of residence and capital gains

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Sam
Newbie

Views 2052

Replies 2

Hi, can I claim an incomplete house as my principal place of residence?
Scenario:
Sold only house last year, now renting.
Bought land early this year to build family home.
Finally finished house design and just signed building contract.
Build will take 12 months (at most).
Now have to go overseas for work for 4 years (prior to completion), and will have to rent out our home while away.
Upon return, if we don't like the house/suburb, and we decide to sell, would we have to pay capital gains even though it was always intended to be our family home?
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ATO Certified

Joe
Initiate

Replies 1

Hi Sam,

 

Based on the situation you have described below you would not be entitled to the 'Main Residence Capital Gains Exemption'.

 

A page on the ATO Website (QC 22168 - https://www.ato.gov.au/General/Capital-gains-tax/Your-home-and-other-real-estate/Your-main-residence), provides the following:

"Your ‘main residence’ (your home) is generally exempt from capital gains tax (CGT). To get the exemption, the property must have a dwelling on it and you must have lived in it."

 

Further, on the above mentioned page there is a section which provides the following:

"build or renovate your home on land you own – you can treat the land as your main residence for up to four years before you move in, provided you move in as soon as practicable after it's finished."

 

I note this specifically to direct you to 'Tax Determination 92/147' (http://ato.gov.au/law/view/document?DocID=TXD/TD92147/NAT/ATO/00001&PiT=**TFN removed**35958), as it addresses the meaning of the phrase 'as soon as practicable'.

 

I recommend having a read through the information identified above.

 

This is my personal view; I’m an ATO employee who chooses to help out here in my own time.

 

2 REPLIES

Best answer

ATO Certified

Joe
Initiate

Replies 1

Hi Sam,

 

Based on the situation you have described below you would not be entitled to the 'Main Residence Capital Gains Exemption'.

 

A page on the ATO Website (QC 22168 - https://www.ato.gov.au/General/Capital-gains-tax/Your-home-and-other-real-estate/Your-main-residence), provides the following:

"Your ‘main residence’ (your home) is generally exempt from capital gains tax (CGT). To get the exemption, the property must have a dwelling on it and you must have lived in it."

 

Further, on the above mentioned page there is a section which provides the following:

"build or renovate your home on land you own – you can treat the land as your main residence for up to four years before you move in, provided you move in as soon as practicable after it's finished."

 

I note this specifically to direct you to 'Tax Determination 92/147' (http://ato.gov.au/law/view/document?DocID=TXD/TD92147/NAT/ATO/00001&PiT=**TFN removed**35958), as it addresses the meaning of the phrase 'as soon as practicable'.

 

I recommend having a read through the information identified above.

 

This is my personal view; I’m an ATO employee who chooses to help out here in my own time.

 

Highlighted

Sam
Newbie

Replies 0

Very useful response. Thanks for your insights.
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