Private ruling: CGT - partial main residence exemption
Date of advice: 19 November 2025
Published: 5 January 2026
Date scheme commenced: 1 July 20xx

Ruling: Q1: Is the capital gain you make from the sale of your interest in the portion of the property that was first acquired by your spouse in 19xx, disregarded in full? | A1: Yes, the interest acquired by your spouse in 19xx is not subject to CGT as you have sold the property within 2 years of the death. | Q2: Is the capital gain you make from the sale of your interest in the portion of property, that was acquired by your spouse in 19xx upon the death of their spouse, disregarded in full? | A2: No. This private ruling applies for the following period: Year ended 30 June 20XX The scheme commenced on: 1 July 20xx


Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 115-A | Income Tax Assessment Act 1997 section 102-20 | Income Tax Assessment Act 1997 section 118-165 | Income Tax Assessment Act 1997 section 118-195 | Income Tax Assessment Act 1997 section 118-200 | Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 128-50 | Income Tax Assessment Act 1997 section 128-15

Reasons for decision: Summary: Any capital gain arising from the disposal of a capital gains tax (CGT) asset is calculated using the cost base of that asset. The cost base of a CGT asset consists of five elements: • the first element, being the acquisition costs, is the total of the money paid, or required to be paid, in respect of the acquisition • the second element is the incidental costs that the taxpayer incurs in acquiring the asset or which relate to a CT event that happens in relation to the asset • the third element is cost of ownership, including both capital and non-capital costs • the fourth element is capital costs associated with increasing or preserving the value of the asset, or installing or moving the asset, and • the fifth element is capital expenditure incurred by a taxpayer in establishing preserving or defending their title to an asset, or right over an asset. The effect of death on CGT is outlined in division 128 of the Income Tax Assessment Act 1997 (ITAA 1997). Subsection 128-15(2) of the ITAA 1997 states that for the CGT asset of a deceased person, a beneficiary is taken to have acquired the asset on the day the deceased died. There are special rules relating to the first element of cost base of CGT assets acquired from a deceased person; these are outlined in subsection 128-15(4) of the ITAA 1997. For an asset that the deceased acquired prior to 20 September 1985 (pre-CGT assets) the first element of the asset's cost base is the market value on the date the deceased died. For an asset the deceased acquired on or after 20 September 1985 (post-CGT assets), the first element of the asset's cost base is the cost base of the asset on the day the deceased died. Taxation Determination TD 2000/31 discusses the capital gains treatment of interests in CGT assets that were acquired at different times. TD 2000/31 provides that the interests remain separate CGT assets for capital gains tax purposes and that when a CGT event such as CGT event A1 (about the disposal of CGT assets) occurs, the following applies; (a) there is a separate date of acquisition for each interest; (b) there is a separate cost base for each interest; and (c) capital proceeds are determined separately for each interest. In this case, person A acquired a portion of the property prior to 19XX. Therefore, that portion was pre-CGT. They subsequently inherited another portion following their spouse's death in 19XX. As this date is after 1985, the first element of the cost base will be the market value on the date of the spouse's death. You have sold the property. The interest acquired by person A in 19XX is not subject to CGT as you have sold the property within 2 years of the death. In relation to the portion of the property person A acquired from person B you will be subject to CGT as this was a post CGT asset and no exemption is available to disregard the gain in full. Only a partial main residence exemption can be obtained. Section 118-200 of the ITAA 1997. The non-exempt portion of any capital gain or capital loss is calculated using the follow formula: Capital gain or capital loss × Non-main residence days Total days Capital Gain or Capital Loss is the amount that you made from the disposal of the property before applying any main residence exemption or reduction. Non main residence days are the number of days in the ownership period that the dwelling was not the main residence of person A. Total days for the interest acquired in 19XX are the number of days from the death of the person B until settlement on the disposal of the property. Total days for the interest acquired by person A in 19XX are the number of days from the death of person B until settlement of its disposal.

Relevant facts: On xx xx, person A and person B acquired a dwelling as joint tenants. (The property) | Person B passed away in 19XX and the interest held by person B passed to person A under the rules of joint tenancy. | The property was occupied by person A as their main residence for a number of years. | The property was continuously rented for a lengthy period of time. Person A lived in another dwelling. | On XX XX 20XX person A passed away. You inherited the dwelling under the Will. | On XX XX 20XX legal title to the dwelling was transferred to you. | On XX XX 20XX the dwelling was sold.