Private ruling: CGT - main residence and adjacent land
Date of advice: 10 September 2025
Published: 17 November 2025
Ruling period: 20XX-XX income year
Date scheme commenced: XX XXXXX 20XX

Ruling: Q1: Will any capital gains tax (CGT) you make be disregarded upon the sale of the Property, in accordance with section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. Under section 118-195 of the ITAA 1997 a capital gain or capital loss is disregarded if you are an individual and the interest passed to you as the beneficiary in a deceased estate, or you owned it as the trustee of a deceased estate. Subsection 118-195(1)(b) of the ITAA 1997 requires that at least one of the items in column 2 and one of the items in column 3 of the Beneficiary or trustee of deceased estate acquiring interest table are satisfied. You satisfy these items even though the properties and adjacent land have been purchased both pre and post CGT. Your ownership interest ends within 2 years of the deceased's death, the properties were not used to produce assessable income, and the adjacent land was predominately for private use. Further, the additional pieces of land are adjacent to that on which the main dwelling is situated, the CGT event relates to the dwelling and adjacent land, and the property was the deceased's main residence just before their death. Therefore, you are exempt from CGT for the main residence and adjacent land for the 20XX-XX income year.

Relevant facts and circumstances: Property address: Main residence - the Property. Adjacent land: the Land XX XXXXX 19XX, the Property was purchased by the deceased. On XX XXXXX 19XX, Land A was purchased by the deceased, this was an adjacent parcel of land that the deceased used for domestic purposes, such as an extended garden and recreational use. On XX XXXXX 19XX, Land 2 was purchased by the deceased, an adjacent parcel of land used for pleasure as a garden for planting trees, creation of a vegetable garden and for the use of the deceased's many grandchildren over the years, to play, ride bikes and have family picnics. On XX XXXXX 20XX, the deceased passed away. The Property was the principal place of residence of the deceased until their date of death. The total land size of the X properties is XXXXsq metres or XXXsq metres each block, and therefore less than 2 hectares. Neither the main residence nor adjacent parcels of land were used to produce assessable income. The joint executors of the estate are the deceased's sons, Child A and Child B. On XX XXXXX 20XX, probate was granted to the joint executors. On XX XXXXX 20XX, the joint executors received an email from Lawyer A, advising the properties had been transmitted into their names as Executors of the Estate. On XX XXXXX 20XX, the joint executors of the Estate entered a Contract of Sale. On XX XXXXX 20XX, the property settlement was completed.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-195 | Income Tax Assessment Act 1997 section 118-120