Private ruling: Deceased estate
Date of advice: 14 August 2025
Published: 20 October 2025
Ruling period: Year ended XX XXX 20XX | The scheme commence on: | XX XXX 20XX
Date scheme commenced: XX XXX 20XX

Ruling: Q1: Before applying section 118-192 of the Income Tax Assessment Act 1997 (ITAA 1997), are you entitled to a partial exemption under section 118-200 of the ITAA 1997 in respect of any potential capital gains tax (CGT) following the disposal of the property? | A1: Yes. The conditions for entitlement to the partial main residence exemption are satisfied. Namely: • You owned the property as the trustee of a deceased estate where the deceased owned it just before they passed away • You are not entitled to a full exemption as there are some non-main residence days during your ownership period such as the period after the absence choice made by the deceased's spouse ceases to have effect • There are also some main residence days during your ownership period such as the whole of the period before the deceased passed away. | Q2: Will the non-main residence days be reduced by the number of days that the deceased's spouse makes an effective choice under section 118-145 of the ITAA 1997 to nominate the property as their main residence, after they moved out? | A2: Yes. Section 118-145 of the ITAA 1997 provides that the property can still be regarded as the main residence of an eligible individual after they stopped living in it, for a maximum of six years from the time it was first rented out, being XX XXX 20XX (absence choice) and for an unlimited period while it is not being used to derive rent. The spouse of the deceased is an eligible individual under item 2, column 3 of section 118-195 of the ITAA 1997. The property was their main residence from the date of death until they moved out. They then nominated it as their main residence under section 118-145 of the ITAA 1997 for a period not exceeding 6 years As such the number of non-main residence days under paragraph 118-200(2)(b) of the ITAA 1997 can be reduced by this period. | Q3: Were you taken to have acquired the property for its market value on XX XXX 20XX under subsection 118-192(3) of the ITAA 1997? | A3: Yes. You meet the conditions for the application of the adjustments imposed by section 118-192 of the ITAA 1997. Namely: • You are entitled to a partial main residence exemption due to the sale of the property. • You would have been entitled to a full main residence exemption if the sale had happened at the first income time (XX XXX 20XX). • The first income time was after 20 August 1996. The adjustments made by section 118-192 of the ITAA 1997 to you as a deceased estate are as follows: • You claim the partial main residence exemption under section 118-185 of the ITAA 1997 as if you were an individual. • You acquired the property for its market value at the first income time (XX XXX 20XX). • The ownership period runs from the first income time until settlement of the sale of the property. • The first six years of this period are main residence days (the choice made by the deceased's spouse is still effective), the remainder are non-main residence days for the purpose of the partial main residence exemption calculation.

Relevant facts and circumstances: The property is located at Address A and is on less than 2 hectares. On XX XXX 20XX the deceased acquired the property. On XX XXX 20XX the deceased passed away. The property was the main residence of the deceased at the time of their passing and was not being used to produce assessable income. Under clause 3(b) of the will the deceased's four children were beneficiaries of the estate with each receiving an equal 25% share. The estate was to be held in trust until the youngest child reached majority age. The will directed the trustees to allow any minor child to reside at the property until their majority. The will also directed the trustees allow the deceased's spouse and parent of the children, Person A, to reside at the property with any minor child provided that they could meet the cost of all outgoings for the property. Person B, as a minor child, resided at the property with their parent Person A following the deceased's passing. On XX XXX 20XX Person A was no longer able to meet the outgoings of the property and they and Person B vacated the property. On XX XXX 20XX the property was rented out. Person A made the choice that the property was still the main residence of themselves and Person B and they did not have any other property as their main residence. On XX XXX 20XX Person B turned 18 years of age. On XX XXX 20XX a contract of sale was signed for the property. On XX XXX 20XX settlement took place.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-145 | Income Tax Assessment Act 1997 section 118-175 | Income Tax Assessment Act 1997 section 118-192 | Income Tax Assessment Act 1997 section 118-200