Private ruling: The sale of a CGT asset
Date of advice: 13 December 2018
Published: April 2019
Ruling period: Year ending 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Will the proceeds from the sale of the house and land package be on capital account? | A1: Yes, you purchased the property as a long term investment with the intention of renting it out when construction was complete. You only decided to sell the property after you developed significant health issues. As a result of this the sale of the house and land package will be accounted for on capital account.

Relevant facts and circumstances: You owned and rented out Property 1. A few years later you signed contracts to purchase a house and land package (Property 2). You purchased Property 2 with the intention to keep as a long-term rental property. Approximately one year after you signed the contracts for Property 2 you developed a medical condition and were unable to drive. About six months later you were hospitalised for some time. Soon after being released from hospital you developed a second medical condition, you were hospitalised once more and received weeks of rehabilitation. Due to these health issues, you decided to sell both Property 1 and Property 2 upon completion of the house. To sell the Property 1, you organized repairs and maintenance to make this property ready for sale. After completion of the repairs to the Property 1 bushfires caused extensive damage to the Property 1 setting back the sale of this property and adding additional stress. A short time later Property 2 was completed, placed on the market and sold. You are not and have never been in the business of building or selling houses.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 118-130 | Income Tax Assessment Act 1997 section 118-195