Private ruling: Capital Gains Tax 2 year main residence exemption for deceased estate
Date of advice: 26 February 2018
Published: June 2018
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) in relation to the dwelling on the property and allow an extension of time until 5 February 2018? | A1: No

Relevant facts and circumstances: The deceased owned residential property. The deceased passed away on XX October 20XX You moved into the property approximately 6 months after that time when probate and other matters were finalised. You updated your address to that of the property on your licence and the electoral role. You spent most of your time living in this property and consider it your main residence. The property was held by you and your brother as trustees and beneficiaries of the Estate from the date of death until its eventual sale and proposed settlement on XX February 20XX. You did not purchase another home and establish a new main residence until after the sale of the property. You will make a capital gain on the sale of the property.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-195.

Reasons for decision: Summary: Subsection 118-195(1) of the ITAA 1997 states that if you own a dwelling in your capacity as trustee of a deceased estate (or it passed to you as a beneficiary of an estate), then you are exempt from tax on any capital gain made on the disposal of the property if: ● the deceased acquired the ownership interest on or after 20 September 1985 and the dwelling was the deceased's main residence just before the deceased's death and was not then being used for the purpose of producing assessable income, and ● the dwelling was, from the deceased's death until your ownership interest ends, the main residence of one or more of: (a) the spouse of the deceased immediately before the death (except a spouse who was living permanently separately and apart from the deceased); or (b) an individual who had a right to occupy the dwelling under the deceased's will; or (c) if the CGT event was brought about by the individual to whom the ownership interest passed as a beneficiary - that individual As you are a beneficiary of the deceased’s will and the property was your main residence until the sale of the pro perty the capital gain made on the sale of the property is disregarded.