Private ruling: Deceased estate - capital gains tax
Date of advice: 18 December 2020
Published: February 2021
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Can you disregard the capital gain made on the disposal of your interest in the dwelling? | A1: Yes. The executors, standing in the shoes of the deceased, have made a choice to continue to treat the dwelling as the deceased's main residence from when the deceased moved out of the dwelling until the deceased's date of death. Having considered your circumstances it is accepted that you meet the requirements under section 118-195 of the Income Tax Assessment Act 1997 and the capital gain made on the disposal of the dwelling is disregarded as the dwelling was the deceased's main residence at the time of death and was sold within two years of the date of death. Use to produce assessable income is disregarded while the absence choice is in effect. Further information about inherited dwellings can be found by searching 'QC 52246' on ato.gov.au

Relevant facts and circumstances: The deceased purchased a dwelling shortly after 20 September 1985. The dwelling was rented for a few years, at which time the deceased moved into the dwelling and lived there as their main residence. A number of years later the deceased moved into an aged care facility. The dwelling was rented out. The deceased died. The dwelling was transferred into the names of the deceased's children, Child A, Child B and Child C in equal shares. The dwelling was sold within two years of the deceased's date of death and a capital gain was made. Assumption The Executors, standing in the shoes of the deceased, made the choice to continue to treat the dwelling as the deceased's main residence from the time they moved into the aged care facility, until their date of death.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-145 | Income Tax Assessment Act 1997 subsection 118-190(3) | Income Tax Assessment Act 1997 section 118-195