The Tax Institute

The capital gains tax (CGT) main residence exemption (CGT MRE) is (arguably) the most generous exemption for post-CGT assets in the income tax legislation. The eligibility requirements are not onerous, and it is available to young and old rich and poor. However, actions, or inactions, can result in loss of the CGT MRE in whole or part.

More pages of the Income Tax Assessment Act 1997 are devoted to the CGT MRE in Subdivision 118-B than to any other Subdivision. This paper looks at some of the traps lurking in the detail of the CGT MRE that can cause the unwary a tax disaster.

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