Main residence exemption from capital gains tax
When you sell or otherwise dispose of a dwelling that was your ‘main residence’ (your home), any capital gain is generally exempt from capital gains tax. This is called the ‘main residence exemption’.
In the recent decision in Keep v FCT (2013) AATA 709, the taxpayer was unable to apply main residence exemption due to lack of evidence to prove that the relevant dwelling was actually his main residence – a newly constructed home.
Generally, the exemption is limited to the four years immediately preceding the day the dwelling became the taxpayer’s main residence.