Private ruling: Capital gains tax - deceased estate - disposal of main residence
Published: March 2013
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Is the capital gain made on the disposal of the deceased's main residence disregarded? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 128-15 | Income Tax Assessment Act 1997 Section 118-110

Reasons for decision: Summary: Capital gains tax (CGT) event A1 happens if you dispose of a CGT asset, the time of the event is when you enter into the contract for its disposal or if there is no contract when the change of ownership occurs. CGT event A1 occurred when you disposed of the property. When a person dies, a capital gain or capital loss from a CGT event happening to a CGT asset owned by the deceased, just before death, is generally disregarded. Where the asset devolves to the trustee or executor or passes to a beneficiary of the deceased estate, the executor or beneficiary is taken to have acquired the asset on the day the person died. You are taken to have acquired the property on the deceased's date of death. If the deceased acquired a property before 20 September 1985, any capital gain or capital loss is disregarded if you dispose of your ownership interest within two years of the deceased's date of death. In your case, you disposed of the property within two years of the deceased's death. Therefore any capital gain made on its disposal is disregarded.

Relevant facts: Prior to 20 September 1985, the deceased purchased a property (the property). | The property was the deceased's main residence. | The deceased passed away early last year. | The deceased was a resident in a nursing home for a number of years prior to their death. | The property was never rented or occupied by anyone during their absence. | The property was disposed of mid year.