Private ruling: : CGT - deceased estate
Date of advice: 28 October 2024
Published: 9 December 2024
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Can the capital gain from the sale of the property be disregarded under section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. The property was sold within two years of the deceased's death. The deceased continued to treat the property as their main residence while living in the nursing home before their death and the use of the dwelling to produce assessable income can be ignored due to the application of section 118-145 and subsections 118-190(3) and (4) of the ITAA 1997 (see Note 2 in 118-195 of the ITAA 1997).

Relevant facts and circumstances: The deceased passed away on DD MM 20YY. The property is located at XXXX (the property). The property is less than two hectares in size. The deceased initially owned the property as tenants in common (with equal shares) with their spouse (Person A) before 20 September 1985. The deceased and Person A occupied the property as their main residence since acquisition. Person A passed away on DD MM 20YY. Following the passing of Person A, the 50% interest of the property originally owned by Person A was transferred to the deceased in accordance with the Will of Person A. The deceased continued to live in the property until they moved into a nursing home in MM 20YY. While living in the nursing home, the deceased continued to treat the property as their main residence with the intention of returning to reside there. The property was first used to produce assessable income in MM 20YY. The property was sold on 2 November 20YY.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-145 | Income Tax Assessment Act 1997 subsection 118-190(3) | Income Tax Assessment Act 1997 subsection 118-190(4) | Income Tax Assessment Act 1997 section 118-195