Private ruling: Capital gains tax and a deceased estate
Date of advice: 14 November 2018
Published: February 2019
Ruling period: Year ending 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Can you reduce the capital gain made on the disposal of property by applying a partial exemption? | A1: Yes. Having considered your circumstances and the relevant factors, you are eligible to reduce your gain by applying the partial exemption – inherited dwellings.

Relevant facts and circumstances: The deceased owned property and this was their main residence up until date of death in 20XX. The deceased left a Will and named an executor and beneficiaries. There was a specific instruction in the Will that that allowed an individual the right to occupy this dwelling indefinitely and to pay half the market rental value. The executor and beneficiaries waived the rental income. Once the estate had settled in 20XX the executor had the title deed transferred solely into their ownership. The property was valued at time of death and an amount was paid to a beneficiary and the executor acquired 100% sole ownership. This property was not the executor’s main residence. The dwelling was not used to produce income and the executor maintained most of the outgoings including rates, insurances and other expenses related to this dwelling. The individual who had the right to occupy passed away in 20XX. Property was sold and settlement occurred as soon as practical.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 115-25 | Income Tax Assessment Act 1997 section 118-110 | Income Tax Assessment Act 1997 section 118-120 and | Income Tax Assessment Act 1997 subsection 118-195(1).