Private ruling: CGT - main residence exemption
Date of advice: 27 April 2022
Published: July 2022
Ruling period: Year ending 30 June XXXX
Date scheme commenced: 1 July XXXX

Ruling: Q1: Are you eligible for a full main residence exemption on disposal of the Property? | A1: Yes. We accept that the beneficial owner of the Property is different to the legal owners, with you being the beneficial owners since the Property was purchased. You as the beneficial owners of the Property are liable for any capital gains tax (CGT) on the disposal of the Property when CGT A1 occurred. However, as the Property was your main residence for the whole of your ownership period, you will be eligible for a full main residence exemption and can disregard any capital gain or capital loss made on the disposal of the Property.

Relevant facts and circumstances: In XXXX, Person A purchased a property (the Property). Renovations and additions have been completed on the Property since purchase. In XXXX, an agreement between Person A and their spouse (Person B) and their child (Person C) and their spouse (Person D) was drafted. This agreement was never executed. The agreement stated that the property was valued at $X at the date of the agreement. This figure constituted a contribution from Person A and contributions from Person C and Person D. The agreement provided that Person C and Person D were to repay the equity of Person A. The draft agreement provided that Person C and Person D were to pay Person A an agreed minimum amount per month with any increase by agreement between the parties. The agreement provided that title was to be held by Person A until final repayment, subject to agreement by Person C and Person D to pay all rates, taxes, insurance and maintain the property in good order. It also provided that Person C and Person D should take out mortgage insurance to cover the amount of the debt should either of them die prior to repayment of the owner's equity. The balance was paid in full several years before Person A died. Person C lived in the Property from the time of purchase until its disposal. Person D lived there from several years afterwards. Person A died several years ago. In their Will, Person A left Person C and Person D interests in the Property if their spouse (Person B) did not attain a vested interest. Person B died several years before Person A. The property was sold a short time ago.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 subsection 118-110(1) | Income Tax Assessment Act 1997 subsection 118-195(1)