CGT Main Residence Exemption - Timing Issues

Timing Issues
The main residence exemption covers the period from when the dwelling is acquired until it is first practicable to take up residence. This allows for a period of grace in moving in, which may be due to illness or the necessity to undertake repairs. The main residence exemption will not cover the period in which an owner cannot move in because it is being rented out.

Changing Main Residence
A taxpayer may sometimes acquire a new dwelling with the intention of making it the new main residence before disposing of the old dwelling. In this situation, both dwellings may be treated as the taxpayer's main residence for whichever is shorter:

(a) the period between the acquisition of the new dwelling and the sale of the old dwelling; or

(b) 6 months

For this to apply,

(a) the old residence must have been the taxpayer's main residence for at least 3 of the 12 months before the disposal; and
(b) the old dwelling was not used to produce assessable income in any part of the 12 month period when it was not the taxpayer's non-residence.

Absences
A taxpayer may maintain a main residence indefinitely without actually inhabiting it. For example, if a taxpayer were to move out to join a troupe of Gypsies, the taxpayer could leave the residence empty and still maintain that as the main residence. A taxpayer, however, may only maintain one main residence, except the period in between of changing main residence. In cases where the main residence is rented, the main residence exemption will not apply after 6 years.

Construction, Renovation or Repair
If land is acquired with the intention of constructing a residential home, the property may be treated as a the taxpayer's main residence for a period of up to four years prior to the property becoming the taxpayer's main residence. It applies regardless of whether there is a preexisting home on the property, or the taxpayer is building from scratch. This is provided that the dwelling is occupied as soon as practicable, it remains the taxpayers main residence for at least 3 months, and no other main residence is being claimed in the interim.

Destruction of the Dwelling
If the dwelling that is the main residence of an individual is destroyed before a house can be erected, and the land is subsequently sold, the taxpayer may still claim the main residence exemption.