Under capital gains tax (CGT) law, a dwelling is considered to be a person’s main residence from the time they acquire their interest in it, provided they moved into it as soon as practicable afterwards. This would generally be the date of settlement of the purchase contract.

However, if there is a delay in moving in because of illness or other unforeseen circumstances, the exemption may still be available from the time the person acquired their interest in the dwelling.

If they could not move in because the dwelling was being rented, they are not considered to have moved in as soon as practical after acquiring their interest.

If a CGT event – for example a sale or disposal – happens to a dwelling that a person acquired on or after 20 September 1985 and that dwelling was not their main residence for the whole time they owned it, they may get only a partial exemption.

You calculate the part of the capital gain that is taxable as follows:

                                                                       Number of days in their ownership period
                                                                         When the dwelling was not their main
Total capital                                                                         residence
gain made from                 X                     -------------------------------------------------------------
the CGT event                                                       Total number of days in their
                                                                                           ownership period

If a dwelling was not their main residence for the whole time a person owned it, some special rules may entitle the person to a full exemption or to extend the partial exemption they would otherwise get.
    

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For more information about partial main residence exemption, please contact us.