Private ruling: Deceased estate and main residence
Date of advice: 24 April 2026
Published: 13 July 2026
Ruling period: Income year ending 30 June 2026
Date scheme commenced: 1 July 2025

Ruling: Q1: Does the death of the Deceased result in a CGT event for their principal place of residence (the Property)? | A1: No | Q2: Does the transfer of ownership of the Property to the executor of the Estate trigger a CGT event? | A2: Yes, but any capital gain or loss from the CGT event is disregarded under section 128-10 of the ITAA 1997. | Q3: Is the sale date for CGT purposes of the Property the date the original signed contracts were exchanged? | A3: Yes | Q4: Does the variation to the original signed and exchanged contract vary the sale date for CGT purposes of the Property? If so, what will be the new sale date for CGT purposes of the Property? | A4: No | Q5: If required, will the Commissioner of Taxation exercise the discretion under section 118-195 of the Income Tax Assessment Act 1997 to allow a period longer than two years for the disposal of the Property, such that any capital gain or loss arising from the disposal of the Property is disregarded? | A5: Yes

Relevant facts and circumstances: 1. The Deceased died. 2. At the time of their death, the deceased was the registered proprietor of the Property. 3. The Property was the Deceased's principal place of residence prior to their death. 4. The Property was not used to produce assessable income at the time of death. 5. Probate of the Deceased's estate (the Estate) was granted with an executor. 6. The executor was recorded as registered proprietor of the Property in their capacity as executor of the Estate. 7. Work had to be done on the Property. 8. Following completion of the work on the Property, solicitors were instructed to prepare a Contract for Sale for the Property. 9. A real estate agent was engaged for the sale of the Property. 10. The Property was marketed. 11. Contracts were exchanged for the sale and purchase of the Property (the Contract). 12. The Contract included a completion date. The completion date was within 2-years of the death of the Deceased. 13. If the Contract was not completed by the completion date a Notice for Completion could be served. 14. Under the Contract, legal title to the Property does not pass to the Purchasers before completion. 15. The Purchasers failed to complete on the completion date. 16. The Vendor served a Notice to Complete on the Purchasers requiring completion. 17. Following negotiations, the contract was varied. The variation gave the Purchaser more time to complete the Contract. The variation confirmed the terms of the Contract. 18. The Contract was completed. 19. The varied date of completion was after 2-years from the death of the Deceased.

Relevant legislative provisions: Section 44 of the Probate and Administration Act 1898 | Section 102-20 of the Income Tax Assessment Act 1997 | Division 104 of the Income Tax Assessment Act 1997 | Section 104-10 of the Income Tax Assessment Act 1997 | Section 118-130 of the Income Tax Assessment Act 1997 | Section 118-195 of the Income Tax Assessment Act 1997 | Section 128-10 of the Income Tax Assessment Act 1997

Reasons for decision: Summary: Detailed reasoning Section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that you can only make a capital gain or a capital loss if a CGT event happens. Division 104 of the ITAA 1997 sets out the CGT events. Division 104 of the ITAA 1997 does not include a CGT event that happens on the death of a person. The death of the Deceased did not result in a CGT event happening in respect of the Property. Detailed reasoning Subsection 104-10(1) of the ITAA 1997 states that 'CGT event A1 happens if you dispose of a CGT asset'. Subsection 104-10(2) of the ITAA 1997 provides that 'you dispose of a CGT asset if a change in ownership occurs from you to another entity, whether because of some act or event or by operation of law. However, a change of ownership does not occur if you stop being the legal owner of the asset but continue to be its beneficial owner'. Subsection 104-10(3) of the ITAA 1997 states that 'the time of the event is: (a) when you enter into the contract for the disposal; or (b) if there is no contract - when the change of ownership occurs'. Probate was granted with an executor. The executor was recorded as registered proprietor of the Property. CGT event A1 happened when the Deceased's ownership interest in the Property was transferred to the executor. Section 128-10 of the ITAA 1997 states that 'when you die, a capital gain or capital loss from a CGT event that results for a CGT asset you owned just before dying is disregarded'. Any capital gain or loss from the CGT event A1 happening is disregarded. | Detailed Reasoning - Questions 3, 4 and 5: Detailed reasoning CGT event A1 will also have happened when the Property was sold to the Purchasers. In accordance with subsection 104-10(3) of the ITAA 1997 the time of the event is when the contract was entered into. The Contract was executed with a completion date. The Contract was not completed on the completion date as the Purchasers could not complete. The Contract allowed a Notice to Complete to be served. The Vendor served a Notice to Complete on the Purchasers. Following negotiations, the Contract was varied. The variation gave the Purchaser more time to complete the Contract. The variation confirmed the terms of the Contract. The Contract continued to set out the terms of the sale and purchase for the Property. The time of the CGT event is when the Contract was entered into. Although the CGT event happened when the Contract was entered into, for the reasons discussed below, the Commissioner considers that the discretion in item 1 of the table in subsection 118-195(1) of the ITAA 1997 will need to be exercised for any capital gain or loss from the CGT event to be disregarded under that subsection. Subsection 118-195(1) of the ITAA 1997 states: A capital gain or capital loss you make from a CGT event that happens in relation to a dwelling or your ownership interest in it is disregarded if: (a) You are an individual and the interest passed to you as a beneficiary in a deceased estate, or you owned it as the trustee of a deceased estate; and (b) At least one of the items in column 2 and at least one of the items in column 3 of the table are satisfied; and Beneficiary or trustee of deceased estate acquiring interest Item One of these items is satisfied 1 the deceased acquired the ownership interest on or after 20 September 1985 and the dwelling was the deceased's main residence just before the deceased's death and was not then being used for the purpose of producing assessable income your ownership interest ends within 2 years of the deceased's death, or within a longer period allowed by the Commissioner 2 the deceased acquired the ownership interest before 20 September 1985 the dwelling was, from the deceased's death until your ownership interest ends, the main residence of one or more of: (a) the spouse of the deceased immediately before the death (except a spouse who was living permanently separately and apart from the deceased); or (b) an individual who had a right to occupy the dwelling under the deceased's will; or (c) if the CGT event was brought about by the individual to whom the ownership interest passed as a beneficiary - that individual (c) the deceased was not an excluded foreign resident just before the deceased's death Subsection 118-130(1) of the ITAA 1997 relevantly states: You have an ownership interest in land or a dwelling if: (a) for land - you have a legal or equitable interest in it or a right to occupy it... Subsection 118-130(3) states that 'for land or a dwelling where you have a contract for the happening of the CGT event, you have an ownership interest in it until your legal ownership of it ends'. The Property was the Deceased's primary place of residence just before their death and was not then being used to produce assessable income. Under the Contract, legal title to the Property does not pass to the Purchasers before completion. For the purposes of section 118-195 of the ITAA 1997, the executors (the Vendor's) ownership interest in the Property did not end until completion (as varied), which is outside the 2-year period required by the section. The requirements of item 1 in the table in subsection 118-195(1) of the ITAA 1997 will not be satisfied unless the Commissioner exercises the discretion in item 1. Practical Compliance Guidelines PCG 2019/5 Capital gains tax and deceased estates - the Commissioner's discretion to extend the 2-year period to dispose of dwellings acquired from a deceased estate (PCG 2019/5) provides guidance on the exercise of the discretion: | Detailed Reasoning - Extending the 2-year period - exercising the Commissioner's discretion: 14. In considering whether to extend the 2-year period, we weigh up all of the factors (both favourable and adverse) having regard to the facts and circumstances of the case... 18. How much weight we give to each factor will depend upon the circumstances of each particular case. The circumstances that caused the delay in disposing of the ownership interest are more important than the length of the delay. The amount of any potential capital gain or loss is not relevant to whether the discretion is exercised. Factors that weigh in favour of the exercise of the discretion include (paragraphs 12 and 15 of PCG 2019/5): • the ownership of the dwelling, or the will, is challenged • a life tenancy or other equitable interest given in the will delays the disposal of the dwelling • the complexity of the deceased estate delays the completion of administration of the estate • settlement of the contract of sale of the dwelling is delayed or falls through for reasons outside of your control, or • restrictions on real estate activities imposed by a government authority in response to the COVID-19 pandemic. Factors that weigh against the exercise of the discretion include (paragraphs 13 and 16 of PCG 2019/5): • waiting for the property market to pick up before selling the dwelling • waiting for refurbishment of the dwelling to improve the sale price • inconvenience on the part of the trustee or beneficiary to organise the sale of the dwelling, or • unexplained periods of inactivity by the executor in attending to the administration of the estate. If the Contract had been completed by the completion date (without it being varied), the executor's ownership interest in the Property would have ended before the 2-year time limit in item 1 of the table in subsection 118-195(1) of the ITAA 1997 and the Commissioner would not need to have exercised the discretion. However, the Contract was not completed on that day as the Purchasers failed to complete. The executor served a Notice to Complete on the Purchasers which required completion. Following negotiation, the Contact was varied and gave the Purchasers more time to complete the Contract. The Contract was completed on the varied date of completion, which is outside of the 2-year period in item 1 of the table in subsection 118-195(1) of the ITAA 1997. The executor made efforts to sell the Property within the 2-year period and had a Contract of Sale executed with a completion date that was before the 2-year period ended. The Contract was not completed within the 2-year period because of issues experienced by the Purchasers. The failure of the Purchasers to complete by the completion date was outside the control of the executor. In the circumstances, the Commissioner will exercise the discretion in item 1 of the table in subsection 118-195(1) of the ITAA 1997 and extend the 2-year period until the date the Contract was completed. As the Commissioner has exercised the discretion in item 1 of the table in subsection 118-195(1) of the ITAA 1997, the requirements of subsection 118-195(1) of the ITAA 1997 are satisfied and any capital gain or loss from the sale of the Property (CGT event A1) can be disregarded.