When completing the Capital Gains Tax (CGT) worksheet for a property owned equally by a husband and wife that was used as a main residence for part of the ownership period, specific adjustments are needed to correctly calculate the taxable capital gain.

Scenario Overview:

  • The property is owned 50% by the husband and 50% by the wife.
  • The property was used as the main residence for 40% of the acquisition period, entitling that portion of the capital gain to a main residence exemption.


Step-by-Step Guidance to Adjust the CGT Worksheet:

1. Capital Proceeds Entry

Enter the total gross sale price into the "Capital Proceeds" field. For example, if the sale price was $1,320,000, enter this full amount.

2. Selling Costs: 

Move all selling costs (e.g., agent fees, advertising) to the "Less Costs incurred" section, rather than including them as part of capital proceeds. For example, selling costs of $27,747 should be deducted here.

3. Cost Base:

Enter the cost base as the total purchase and associated acquisition costs, allocated by ownership share. Since ownership is 50/50, enter 50% of the total cost base for each spouse’s share.

4. Applying the Main Residence Exemption:

Because the main residence exemption applies to 40% of the ownership period, the capital gain should be reduced accordingly. This requires manual adjustment:

  • Calculate the total capital gain before exemption.
  • Multiply the gain by 40% to determine the exempt portion.
  • Then, either:

            > Enter the taxable capital gain (i.e., 60% of the total gain) manually into the worksheet, or

            > Use the "Less main residence exemption" field (if available) to enter the exempt amount explicitly.

5. Reporting:

Only the taxable portion of the capital gain after exemption should be reported for tax purposes. The exempt portion (40%) does not attract CGT.

Additional Notes:

Since the property is jointly owned, each spouse must report their share of the capital gain after the exemption adjustment, typically 50% of the taxable gain.

At present, some tax software (such as LodgeiT) does not automatically calculate partial main residence exemptions, so manual entries are necessary.

Always maintain detailed records of purchase price, costs, periods of main residence use, and relevant calculations to support your claims if requested by the ATO.

For further details on main residence exemptions and CGT calculations, consult the Australian Taxation Office guidance on main residence exemption.