Private ruling: Main residence exemption
Date of advice: 14 May 2026
Published: 27 July 2026
Ruling period: Period ended DD MM YY
Date scheme commenced: DD MM YY

Ruling: Q1: Is the disposal of the property by the trustee eligible, in whole or in part, for the main residence exemption under Subdivision 118B of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. Section 118-210 of the Income Tax Assessment Act 1997 (ITAA 1997) allows an exemption on the disposal by a trustee of a dwelling (or ownership interest in it) that was acquired by the trustee for occupancy by a beneficiary under the terms of the deceased's Will. The dwelling will qualify for the main residence exemption for the period it was occupied by the beneficiary. Taxation Determination TD 1999/74: Income tax: capital gains: in what circumstances does a trustee of a deceased estate acquire an ownership interest in a dwelling 'under the deceased's will' for the purposes of subsection 118-210(1) of the Income Tax Assessment Act 1997 clarifies the concept of 'under the Will' as requiring a connection between the trustee's acquisition of the dwelling and the deceased's Will. It notes the connection need not be a strict one. The Will of the deceased stated that if their spouse Person C should survive them then, under schedule 1 of the Will, the estate was to be liquidated and held on trust for Person C for their life. Schedule 3 clause 6 of the Will authorises the trustee of the estate to invest any part of the estate in real property. As trustee of the deceased's estate, you acquired the dwelling at Address A for Person C to reside in. The property was their main residence from settlement until their passing in MM YY. As such the conditions of section 118-210 are met and the main residence exemption will apply. The trustee can disregard any capital gain or capital loss made on the sale of the property.

Relevant facts and circumstances: On DD MM YY the deceased executed their Will. It stated: • That their children Person A and Person B were to be the executrix of the estate • That if their spouse Person C should survive them by one month then schedule 1 of the Will was to apply and if they did not, then schedule 2 of the Will was to apply. Person C did survive the deceased so under the terms of schedule 1 of the Will: • All articles of personal or household use were left to Person C • The rest and residue of the estate was to be held in trust for Person C for their life • And that on their death it was to be divided among the remainder beneficiaries. Schedule X Clause X of the Will authorised the trustees to invest the whole or part of the estate in real property. On DD MM YY the deceased passed away. Person B renounced their role as executor and Person A remained as sole executor and trustee. On DD MM YY probate for the estate was granted to Person A. In their role as trustee, Person A used estate funds to purchase a residential property at Address A. On DD MM YY the contract of sale was signed. On DD MM YY settlement of the property occurred. Person C moved into the property immediately on settlement. The property was less than X in size. The property was registered in the name of Person A as legal personal representative for the testamentary trust created in the name of Person C. Person C remained at the property as their main residence from this time until their passing. On DD MM YY Person C passed away. Following their passing Person A sold the property in their role of trustee of the trust. On DD MM YY the contract of sale was signed. On DD MM YY settlement of the property took place.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-210