Private ruling: CGT - deceased estate
Date of advice: 5 November 2021
Published: January 2022
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 31 August 20XX

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 118-200(3) of the Income Tax Assessment Act 1997 (ITAA 1997) to extend the 2-year time limit to dispose of an inherited property? | A1: Yes. Having considered the circumstances and relevant factors you have provided; the Commissioner will exercise his discretion and allow an extension of the 2-year limit for a partial exemption from CGT on the disposal of an inherited property. CGT is disregarded from the deceased's date of death until the disposal of your ownership interest in the property. Further information about this discretion can be found by searching 'QC 66055' on ato.gov.au.

Relevant facts and circumstances: Your tax agent advised that: In XX 19XX the deceased and the deceased's spouse purchased the property. They held the property as joint tenants. The deceased and the deceased's spouse lived in the property until XX 20XX when they moved into a nursing home. The deceased's spouse passed away XX XX 20XX. The spouse's share of the property transferred to the deceased. This resulted in a different cost base for each 50% portion as the transferred portion became post CGT. The deceased passed away on XX XX 20XX. You are one of two beneficiaries of the deceased. Probate was finalised on the property and the title was transferred to the beneficiaries. At this time, the beneficiaries inherited the property as tenants in common. The 2-year limit for the CGT partial exemption was XX XX 20XX. As the deceased had moved into the nursing home, not being able to independently care for themselves, the property is treated as the main residence of the deceased at the time of their death. The property has been leased to a single tenant for X years. The property was used to produce assessable income for the beneficiaries after the passing of the deceased. The property was not the main residence of the beneficiaries or a person entitled to live in it according to the terms of the will. As a result of the impacts of COVID-19, you made the decision to sell the property in 20XX when you considered conditions would ease. The tenant was advised the property was going to be sold in XX 20XX. You engaged with real estate agents in XX 20XX. On XX XX 20XX the local government area (LGA) the property is located in was subject to a lockdown as a result of the COVID-19 outbreak. On XX XX 20XX you chose a real estate agent to represent you in the sale of the property. The auction date was XX XX 20XX and the real estate agent intended to hold inspections of the property on appointment until that date. The property was advertised on a number of websites by the agent. As a result of the lockdowns there were limits on the number of inspections that the real estate agent could hold. The tenant also resisted the entry of people, being concerned with the possibility of contracting COVID-19. They advised they only wanted people accessing the property on Saturdays and limited to those within the same LGA. This limited the number of prospective buyers that could view the property. Due to these circumstances the auction was delayed until XX XX 20XX. Before the auction could take place, you received an offer which you accepted with the contract date of XX XX 20XX. The settlement date for the property was XX XX 20XX.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 section 118-195 | Income Tax Assessment Act 1997 subsection 118-195(1)