Private ruling: Main residence exemption
Date of advice: 17 November 2017
Published: April 2018
Ruling period: Year ending 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Will the main residence exemption be applicable to the property under subsection 118 - 195 of the ITAA 1997? | A1: Yes Having considered your circumstances and the relevant factors, a capital gain or loss will be disregarded under subsection 118 - 195 of the ITAA 1997 from the sale of the property. We acknowledge that there was a private or domestic arrangement in which the property was accommodated by your relative with a fee paid to you for this arrangement.

Relevant facts and circumstances: You owned a property which was acquired after 20 September 1985. The property was used as your main residence from the date of acquisition up until your date of death. In March 20XX, your care was transferred to the State Trustee and Guardian and you were placed into a nursing home as you could not live independently. After you were placed into a nursing home your relative commenced accommodating the property, under contract at a fee of $XX per week which was below the market rate of rent. The arrangement was private and domestic in nature and the sole purpose of this arrangement was to maintain the condition of the property in case you could live independently again. You passed away in September 20XX. A contract was signed on the property and the property settled within two years from the date of your death. A real estate agency provided advice in September 20XX stating that they consider the likely rental market price of the property in 20XX would have been in the vicinity of $XX per week assuming the condition of the property at the time was reasonable. It was also advised if the property was in reasonable order when the advice was issued that the rent would be in the vicinity of $XX per week.

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