Private ruling: CGT - deceased estate
Published: May 2014
Ruling period: Year ending 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: A1: Yes.

Relevant facts and circumstances: The dwelling (property) is at address X. Your parents built this property before 1985 and used it as their main residence ever since. After one of your parents' death, the other parent kept living in the property as main residence. The other parent died a few years ago. According to the Will, you were a beneficiary of the deceased estate and you were entitled to 100% ownership interest of the property. The property was transferred into your name after the Will was settled. You have been living in the dwelling before your second parent's death, until now. You are going to sell the property in near future. You will keep living in the property until it is sold.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-110. | Income Tax Assessment Act 1997 section 118-195.

Reasons for decision: Summary: A capital gain or capital loss is disregarded under section 118-195 of the ITAA 1997 where a CGT event happens to a dwelling if it passed to you as an individual beneficiary of a deceased estate or you owned it as the trustee of the deceased estate. The availability of the exemption is dependent upon: - who occupied the dwelling after the date of the deceased's death, or - whether the dwelling was disposed of within two years of the date of the deceased's death. For a dwelling acquired from the deceased, you will be entitled to a full exemption if: • the dwelling was, from the deceased's death until your ownership interest ends, the main residence of one or more of the following relevant individuals: - the spouse of the deceased immediately before death (except a spouse who was living permanently separately and apart from the deceased) - an individual who had a right to occupy the dwelling under the deceased's will, or - an individual beneficiary to whom the ownership interest passed and that person disposed of the dwelling in their capacity as beneficiary. In your case, when the deceased died, you were a beneficiary of the deceased estate and entitled to 100% ownership interest of the property. The property was the deceased's main residence prior to death, and at that time, was not being used to produce assessable income. Then the property was occupied by you, a relevant individual, after the deceased's death. You have been living in the property as your main residence since before the deceased's death, and will keep living in it until it is sold. Therefore you satisfy the basis of exemption. Any capital gain or loss you make from selling the property will be disregarded.

Question and answer: Will a capital gain or loss you make from the disposal of your dwelling disregarded under the Income Tax Assessment Act 1997 (ITAA 1997)?