Private ruling: Deceased estate
Date of advice: 21 October 2025
Published: 8 December 2025
Ruling period: Period ended DD MM YY
Date scheme commenced: DD MM YY

Ruling: Q1: Will any capital gain or loss arising from the sale of the property at Address A, by the executors for the Estate of Person B, be fully disregarded under section 128-15(3) of the Income Tax Assessment Act 1997 (ITAA 1997) given the Estate of Person B is the beneficiary of the Estate of Person A? | A1: Yes. Person B was the remaining executor of the Estate of Person A and beneficiary of the property at Address A. The title of the property was transferred into Person B's name as executor for the estate but was never transferred into their name as beneficiary. The property remained in the Estate of Person A. On the passing of Person B, their estate became the beneficiary of the property. As such, any capital or loss made on the sale of the property by the executors for the Estate of Person B, can be disregarded by the Estate of Person A under subsection 128-15(3). The fact that the title of the property was never formally transferred does not affect the application of the rollover relief. | Q2: Will the sale of the property by the executors for the Estate of Person B still be eligible for the main residence exemption under section 118-195 of the ITAA 1997 given that Person B was the beneficiary of the property, and it was their main residence until their passing? | A2: Yes. Subdivision 118-B allows for a CGT exemption on the disposal of a property that was a deceased's or a beneficiary's main residence, and that was not used to produce assessable income. Person B had sole beneficial ownership of the property and used it as their main residence. The property was not used to produce assessable income, and it was sold within two years of their date of death. The main residence exemption under 118-195 will apply. | Q3: In determining any capital gain or loss on the sale of the property by the executors for the Estate of Person B, is the Estate of Person B deemed to have acquired the property on the date of the passing of Person A, and therefore the cost base is the date the property was acquired by Person A. | A3: Yes. Subsection 128-15(4) sets out the modifications to the cost base and on what date the first element of the cost base will fall for the legal personal representative of an estate, or the beneficiary of an estate. For a property acquired after 20 September 1985, that was the main residence of the deceased before they died, and that was not being used to produce assessable income, the first element of the cost base is the market value on the date of death. Person A acquired the property after 20 September 1985. The property was not transferred to Person B prior to their death and so the Estate of Person A retained ownership of the asset. Person B was the beneficiary of the property. On their passing their estate became the beneficiary of the property. Under subsection 128-15(4) Person B's estate is taken to have acquired the asset on the date of Person A's death.

Relevant facts and circumstances: On DD MM YY Person A acquired a property at Address A (the property). The property is on less than 2 hectares. On DD MM YY Person A passed away. At the time of their passing the property was their main residence and was not being used to produce assessable income. Person A's Will named their sibling Person C and their spouse Person B as executors for their estate, and aside from a few small bequests, were majority beneficiaries of the residual of the estate, including the property. On DD MM YY, XX days after Peron A's passing, Person C passed away. Because this was within 30 days of Person A's passing, under the relevant state's Wills act, they were taken to have passed before Person A. This meant that Person B was the sole executor of the estate and sole beneficiary of the residual of the estate. On DD MM YY probate was granted to Person B. On DD MM YY the title of the property was transferred into Person B's name as executor for Person A's estate. The title of the property was never transferred into Person B's name as beneficiary and sole owner. Person B had engaged a solicitor to assist with the administration of the estate however this firm cannot now be located so there are no records to indicate why the property was not transferred to Person B as sole owner. Person B lived in the property as their main residence and paid all the upkeep costs on it. On DD MM YY Person B passed away. Person B's Will named their children Person D and Person E as executors of their estate. It left 3 small monetary bequests to others and then the residual of their estate to their four children. On DD MM YY probate of Person B's estate was granted to Person D and Person E. On DD MM YY the title of the property was transferred into Person D's and Person E's names as executors of Person A's estate. On DD MM YY the property was sold On DD MMM YY the property settled.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-195 | Income Tax Assessment Act 1997 section 128-15(3) | Income Tax Assessment Act 1997 section 128-15(4)