Private ruling: Capital gains tax - disposal of an interest in a house by your relative
Published: January 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you liable for capital gains tax (CGT) when your sibling disposes of their interest in the house? | A1: No.

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. You and your sibling inherited an equal share in a house from your parent's estate after 20 September 1985, as tenants in common. The house has never been used as a main residence by you or your sibling. Your sibling is going to dispose of their 50% interest to an unrelated person.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-10. | Income Tax Assessment Act 1997 Section 108-7.

Reasons for decision: Summary: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. The most common CGT event is CGT event A1, which occurs when you dispose of a CGT asset, such as an interest in a dwelling. The time of the event is when you enter into the contract for its disposal or if there is no contract when a change of ownership occurs. | Detailed Reasoning - Tenants in common: Individuals who own a CGT asset as tenants in common are treated as if they each own a separate CGT asset and they may hold unequal interests in the asset. Each tenant in common makes a capital gain or capital loss from a CGT event in line with their interest in the asset. In your case, you and your sibling each own a 50% interest in the house. As stated above a CGT event only occurs when you dispose of a CGT asset. In your case, you are not disposing of your 50% interest in the house. Therefore, you are not liable for any CGT on the disposal of your sibling's interest in the house.