Private ruling: Capital gains tax exemption for a deceased estate dwelling.
Date of advice: 9 November 2018
Published: March 2019
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Upon disposal of the property will the trustees of the estate be entitled to a full exemption under section 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No. | Q2: Upon disposal of the property will the trustees of the estate be entitled to a partial exemption under section 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A2: Yes

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. In 19XX the deceased acquired a property as a sole proprietor. The Property was the main residence of the deceased until their death and their second spouse also occupied the Property as their main residence during their marriage. In 20XX, the deceased died leaving a will dated 20XX. Under the terms of the will, the Property was gifted to the Executors as trustees to be held on trust with a right of occupation granted to their spouse for so long as they wished or until they remarriaged or death with the usual provisos that they be responsible for payment of rates, taxes and the maintenance of the Property fair wear and tear excepted. Probate of the will was granted in 20XX by the Relevant Court of State A to the Executors. Shortly after, the Executors became registered on the title as the legal proprietors and as joint tenants in their capacity as Executors. In late 20XX, the spouse moved into a nursing home on a permanent basis. Early the following year they formally advised the trustees of the deceased estate by letter that they no longer wished to reside in the Property and renounced their right of occupation however, as the spouse of the deceased, they still treated the dwelling as their main residence. Under the terms of the will, upon renunciation, the Property fell into the residue to be divided amongst the X adult children of the Deceased as tenants in common in equal shares. The trustees then sought advice from a real estate agent as to the marketing and sale of the Property however was not immediately marketed for sale due to the need to clean the Property and remove all chattels of the spouse. A contract of sale was exchanged in mid 20XX with settlement approximately X months later.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 128-15 | Income Tax Assessment Act 1997 section 118-195 | Income Tax Assessment Act 1997 section 118-200 | Income Tax Assessment Act 1997 section 104-10