[Tax] Is CGT free when husband and wife each own a main residence and live separately in Australia?

In Australia, if a husband owns 100% of a main residential property in Sydney, and a wife owns 100% of a main residential property in Melbourne, and the husband and wife have lived in their respective properties in two different cities for work since 2020, can both the husband and wife enjoy the 100% main-residence CGT exemption in Australia when they sold their respective properties in 2026?​

1

    Short answer: No

Neither spouse can claim a full 100% main‑residence CGT exemption for two different homes for the same period. Australian tax law forces couples to choose how the exemption is allocated. 

 2

      ATO's view

ATO's webiste https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/your-main-residence---home/living-separately-to-your-spouse-or-children?utm_source=copilot.com has texts below:

If you and your spouse have different homes for a period, for CGT purposes you and your spouse must either:

• choose one of the homes as the main residence for both of you for the period

• each nominate one of the different homes as your main residence for the period.

If you nominate different homes for the period and you own 50% or less of the home you have nominated, you qualify for an exemption for your share.

If you own more than 50%, your share is exempt for half the period you and your spouse have different homes. The same rule applies to your spouse.

This rule applies to each main residence the spouses nominate, whether they have sole ownership or own the home jointly (either as joint tenants or tenants in common).

This rule applies even if the spouses live apart for work, and even if each owns their home 100%.

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     Legislation s.118-170 ITAA 1997

INCOME TAX ASSESSMENT ACT 1997 - SECT 118.170

Spouse having different main residence

 (1)  If, during a period, a dwelling is your main residence and another dwelling is the main residence of your * spouse (except a spouse living permanently separately and apart from you), you and your spouse must either:

 (a)  choose one of the dwellings as the main residence of both of you for the period; or

 (b)  nominate the different dwellings as your main residences for the period.

 (2)  If you nominate the different * dwellings as your main residences for the period, you split the exemption in accordance with subsections   (3) and (4).

 (3)  If your interest in the * dwelling you chose was not, during the period, more than half of the total interests in the dwelling, the dwelling is taken to have been your main residence during the period. Otherwise, the dwelling is taken to have been your main residence for half of the period.

 (4)  If your spouse's interest in the dwelling your spouse chose was not , during the period, more than half of the total interests in the dwelling, the dwelling is taken to have been your spouse's main residence during the period. Otherwise, the dwelling is taken to have been your spouse's main residence for half of the period.

Example:  You and your spouse (who are Australian residents) own a town house as tenants in common in equal shares. You and your spouse also own a beach house as tenants in common, with your interest being 30% and your spouse's 70%. From 1   July 1999, you live mainly in the town house and your spouse lives mainly in the beach house. On 1   July 2000 you and your spouse dispose of both dwellings.

For the period 1   July 1999 - 30   June 2000 you nominate the town house as your main residence and your spouse nominates the beach house. The town house is taken to be your main residence during the period. The beach house is taken to be your spouse's main residence during half the period.

Reference: ATO, ITAA 1997