It is often assumed that simply living in a dwelling even for a short period of time will entitle you to an exemption from CGT. This is because you may think that you have a right to claim it as a principal place of residence which you receive an exemption from capital gains tax. This to some extent is false – there is alternate criterion that needs to be met.
More recently, a decision came to light via the Administrative Appeals Tribunal (ATT), which rejected an application for CGT exemption notwithstanding the fact that the taxpayer was said to have occupied the dwelling with his estranged de facto for three months. This short time period of three months is foreseen as an unofficial minimum amount of time for the CGT exemption to activate, regardless of the fact that there is the absence of a prescribed legislated time period.
Not only did the AAT inquire whether the occupancy conditions had been met, it said there was no evidence of any gas or electricity accounts for the house in the taxpayer’s name, his mail was being directed to his sister’s Queensland address, he obtained a Queensland driver’s licence using her address and also used it for his income tax return.
In general, a dwelling you are no longer living in is unlikely to qualify for CGT exemption unless you and your family lived in it, your personal belongings were in it, it was the address your mail was delivered to, it was your address on the electoral roll, and services were connected (for example, telephone, gas or electricity). As previously mentioned, the amount of time you spend there is also associated.
If you would like any information concerning CGT, please contact our Mascot office of Pryor Tzannes & Wallis Solicitors.