Private ruling: Capital gains tax - deceased estate - main residence exemption
Date of advice: 21 April 2016
Published: June 2016
Ruling period: Year ending 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you eligible for the full main residence exemption on the disposal of your property? | A1: Yes.

Relevant facts and circumstances: Your spouse purchased a property in their name in the 19XX-XX financial year. The property was rented for a period of time, until you and your spouse moved into the property as your main residence. Your spouse passed away in the relevant financial year. The property was your spouse's main residence just prior to their death. You were the sole executor and beneficiary of your spouse's estate. You inherited the house and the legal title of the house changed into your name in the subsequent financial year. You have continued to live in the property as your main residence since your spouse's death. The property has not been used to produce income since the deceased's death.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-195 and | Income Tax Assessment Act 1997 subsection 128-15(4).

Reasons for decision: Summary: Under section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997), you can disregard a capital gain from a dwelling if: • the deceased acquired the dwelling after 20 September 1985, • it was their main residence just prior to their death and • from the deceased's death until you disposed of your ownership interest, the dwelling was not used to produce income and was the main residence a person who was the spouse of the deceased immediately before the deceased's death. Therefore you would be entitled to a full main residence exemption, as your spouse purchased the property in 19XX-XX financial year and it was their main residence just prior to their death. Furthermore from the period of the deceased's death until you dispose of your ownership period, the property was not being used for the purpose of producing assessable income and it was your main residence during this period.