Private ruling: Capital gains tax - Deceased estate - Inherited dwelling - Disposal
Published: March 2012
Ruling period: Year ended 30 June 2013
Date scheme commenced: 6 April 2013

Ruling: Q1: Is the capital gain made on the disposal of the dwelling disregarded? | 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.

Reasons for decision: Summary: Capital gains tax (CGT) is the tax you pay on certain gains you make. You may make a capital gain or a capital loss as a result of a CGT event (section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997)). The most common event happens if you dispose of an asset to someone else, for example if you sell your dwelling. The sale of your dwelling constitutes CGT event A1 (section 104-10 of the ITAA 1997). Any capital gain or capital loss you make from a CGT event that happens in relation to a dwelling that has passed to you as a beneficiary in a deceased estate is disregarded if the deceased acquired the dwelling before 20 September 1985 and you disposed of your ownership interest within two years of the persons death (section 118-195 of the ITAA 1997). Therefore, if the dwelling is not disposed of within the two years from date of death, any capital gain or capital loss realised on your interest in the dwelling will be assessable. There is no discretion within the Income Tax Assessment Act 1997 for the Commissioner to extend the two year period. In your case, as you will dispose of your interest in the dwelling as trustee of a deceased estate, after two years from the date of the deceased's death, you are not entitled to a main residence exemption.

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: The deceased purchased the dwelling prior to 20 September 1985 | The deceased passed away a number of years after the dwelling was acquired | You have been appointed as a trustee of the deceased's estate | No one has a right to occupy the dwelling under the deceased's will | You will sell the dwelling as trustee and not as a beneficiary | Settlement of the dwelling will occur more than two years after the deceased's date of death.