Private ruling: Deceased estate main residence exemption
Published: October 2013
Ruling period: Year ending 30 June 2012 | Year ending 30 June 2013
Date scheme commenced: 1 July 2011

Ruling: Q1: Will the Commissioner exercise his discretion under subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) and allow an extension of time to the two year period? | A1: Yes.

Relevant facts and circumstances: The deceased passed away in 199X. The deceased acquired their main residence in 197X. The deceased's will name the deceased's children as the executors and beneficiaries to the estate. The deceased's main residence was left as part of the estate. The property was transferred into the beneficiaries' names. The deceased left a codicil to their will which provided that the deceased's spouse has a right to reside in the property during the spouse's lifetime. The deceased's spouse resided in the property until 201X. At this time the spouse relinquished their right to the property when they moved into a nursing home. The sale of the unit was completed a few months later and has resulted in a capital gain.

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

Reasons for decision: Summary: Subsection 118-195(1) of the ITAA 1997 states that if you are an individual who owns a dwelling in a capacity as trustee of a deceased estate, or the dwelling has passed to you as a beneficiary of the estate, then you are exempt from tax on any capital gain made on the disposal of the property if: · The property was acquired by the deceased before 20 September 1985; and · From the deceased's death until your ownership ends was the main residence of the spouse of the deceased. In your case the deceased acquired the property in 1975. The deceased passed away in July 1998 and the home was used by the deceased's spouse until the property was in September 2012. Accordingly, you can disregard the capital gain that arose as a result of the disposal of the property under the main residence exemption.