Private ruling: Capital gains tax - Deceased estate - Disposal
Published: March 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Will you be liable for capital gain tax as a result of disposing of the inherited dwelling? | A1: No.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 102-20 | Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 118-195 | Income Tax Assessment Act 1997 Section 118-200 | Income Tax Assessment Act 1997 Section 118-145 | Income Tax Assessment Act 1997 Section 128-15

Reasons for decision: Summary: A CGT event A1 happens if you dispose of a CGT asset. You dispose of a CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law. Further, the capital gain or capital loss is made at the time of the event. A capital gain is made if the amount received (called capital proceeds) from the disposal exceeds the cost base of the CGT asset. | Detailed Reasoning - Asset acquired from a deceased estate: Special rules apply when an asset owned by a person just before they die, passes to their trustee or beneficiary of a deceased estate. The beneficiaries deemed date of acquisition of property from a deceased estate, is the date of the deceased's death. Regardless of the actual date that legal title in the property passed, for CGT purposes you are considered to have acquired parent ('B') property on the date of your parent ('B') death. | Detailed Reasoning - Main Residence - Full Exemption: Section 118-195 of the ITAA 1997 provides when a capital gain or capital loss from certain CGT events that happen in relation to a dwelling which a taxpayer owns as a beneficiary of a deceased estate can be disregarded in full. For a dwelling acquired by the deceased on or after 20 September 1985 which was their main residence just before they died and was not then being used for the purpose of producing assessable income, the beneficiary will be entitled to a full exemption if: o the beneficiaries ownership interest ends within two years of the deceased's death or o the dwelling was from the deceased's death until your ownership interest ends the main residence of one or more of: o Spouse of the deceased immediately before death o An individual who had a right to occupy the dwelling under the deceased's will o A beneficiary to whom the ownership interest passed and that person disposed of the dwelling in that capacity. In your circumstances, you will sell the property as a beneficiary of parent ('B') estate and this will occur within two years of the date of death and as such any capital gain will be disregarded.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: Your late parent (parent 'A') had a sole interest in a property acquired prior to 20 September 1985 | Parent ('A') left their sole interest in the property to parent ('B'), | Parent ('B') resided in this property prior to 20 September 1985 until moving into a nursing home for a period of time before passing away after a number of years | You are the beneficiary and trustee of parent ('B') will | You have resided in the property for a number of years | The property has been transferred into your name as a beneficiary under the terms of parent ('B') will | You will sell the property within two years of the date of death of parent ('B') | You will make an absence choice as trustee of parent (B') estate. | The property has not been used to produce income | You will make a capital gain as a result of the sale