Private ruling: CGT - main residence exemption
Date of advice: 19 August 2021
Published: October 2021
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to disregard the entire capital gain made on the disposal of the deceased's main residence, pursuant to subsection 118 - 195(1) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. The estate has satisfied the requirements of section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997). As the period of time that the property was used for income producing purposes up to the date of death was less than six years, the income producing use of the property can be disregarded in accordance with section 118-190(4) of the ITAA 1997. Accordingly, the capital gain made on the sale of the property can be disregarded.

Relevant facts and circumstances: In mid to late 19XX, the deceased (who passed away in mid-20XX) purchased a property. Immediately after the acquisition of the Property, the deceased moved into the Property and established it as their main residence. The Property acquired by the deceased is considered to be a flat or home unit and accordingly, the Property falls within the meaning of a "dwelling" in accordance with subsection 118-115(1). At all relevant times, the deceased had an ownership interest in the dwelling as they had a legal or equitable interest in a stratum unit (a lot or unit and any accompany property) in the Property, in accordance with subsection 118-130(1). The Property was the deceased's main residence from the purchase date until mid to late 20XX, where due to health and wellbeing reasons, the deceased moved into a nursing home. From mid to late 20XX until the deceased's date of death in mid- 20XX, the Property was rented out to an unrelated third party through a real estate agency (for a total period of less than six years). At the date of the deceased's passing, the Property began to be held by the executor of the deceased's estate (the rulee). A contract for the sale of the Property (the "sales contract") was entered into by the rulee in early 20XX. (i.e. the sales contract was entered into within two years of the deceased's death). As the sale price was greater than the cost base of the Property, a capital gain was made. From the date of the deceased's passing until settlement of the sale, the Property continued to be rented out to an unrelated third party through a real estate agency by the rulee. That is, the Property was rented from mid- 20XX until early-to-mid 20XX (for a total period of less than six years). At all relevant times, the deceased did not own any other properties in Australia that they treated (or could be considered to have treated) as their main residence.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 118-195(1)


This ruling applies for the following period periods :