Can a yacht, tent or underground dwelling be your house and therefore tax free?

Can the following comprise a ‘dwelling’ and therefore be eligible for exemption as a main residence?

(i) a structure built underground?

(ii) a yacht?

(iii) a tent?

The meaning of ‘dwelling’ is defined in section 118-115 of the Income Tax Assessment Act 1997 (ITAA 1997). A ‘dwelling’ includes:

· a unit of accommodation that is a building or is contained in a building and consists wholly or mainly of residential accommodation; and

· a unit of accommodation that is a caravan, houseboat or other mobile home; and

· any land immediately under the unit of accommodation.

However, except as provided in section 118-120 of the ITAA 1997, a dwelling does not include any land adjacent to a building.

A Structure Built Underground

A structure built underground (e.g. an underground home at Coober Pedy) would constitute a ‘dwelling’. There is no requirement that a residential building be constructed above the ground to qualify for exemption.

A Yacht

A yacht may, under certain circumstances, constitute a mobile home or houseboat and therefore, a ‘dwelling’ for exemption purposes. Provided that the level of facilities is such as to make the yacht habitable, the yacht will be accepted as a ‘dwelling’.

A Tent

In most circumstances, a tent will not be regarded as a substantial structure within the scope envisaged by the definition of ‘dwelling’ in section 118-115 of the ITAA 1997. As the definition connotes a substantial permanent structure, a tent would usually not satisfy this requirement.

Note: Whether a dwelling is a person’s main residence is a question of fact.

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