Private ruling: CGT - deceased estate
Published: July 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Can you disregard any capital gain or capital loss made on the sale of the dwelling? | A1: Yes.

Relevant facts and circumstances: The deceased died a number of years ago. The property was purchased prior to September 1985. The property was the main residence of the deceased and was never used to produce income. The will was challenged and the house was not sold within the 2 year time limit. The house was sold a few months after the court decision was made. Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 118-195(1).


Reasons for decision: Summary: Subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) states that if you are an individual who owns a dwelling in a capacity as trustee of a deceased estate, then you are exempt from tax on any capital gain made on the disposal of the property acquired by the deceased after 20 September 1985 if: · the property was the deceased's main residence just prior to their death · it was not being used to produce assessable income at this time, and · Your ownership interest ends within 2 years of the deceased's death (the Commissioner has discretion to extend this period in certain circumstances). You have an ownership interest in a property if you have a legal interest in the property. This means that if you sell a property, your ownership interest continues until the date of settlement (rather than the date the contract of sale is signed). The deceased purchased the property prior to September 1985. It was used as the deceased main residence and was never used to produce income. Due to court proceedings the property was not sold within 2 years of the deceased's death. The Commissioner will exercise his discretion to extend the 2 year time limit due to complexities and difficulties arising from the estate. Any capital gain or loss made on the sale of the property can be disregarded.

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