Private ruling: Main residence exemption
Date of advice: 24 September 2025
Published: 17 November 2025
Date scheme commenced: DDMMYY

Ruling: Q1: Will the Commissioner exercise the discretion under section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997) to allow an extension of time for you to dispose of the ownership interest in the Property, held by the deceased as a joint tenant, and disregard the capital gain or capital loss you made on the disposal? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner will allow an extension of time to dispose of the Property. Further information about the Commissioner's discretion can be found by searching ato.gov.au for 'QC 66057'. | Q2: Will the Commissioner exercise the discretion under section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997) to allow an extension of time for you to dispose of the ownership interest, held by you as a joint tenant, in the Property and disregard the capital gain or capital loss you made on the disposal? | A2: No. | Q3: Are you eligible for a partial main residence exemption on your ownership interest you held in the Property, as a joint tenant with the deceased, for the period you resided in the Property? | A3: Yes. This private ruling applies for the following period: Year ending X June 20XX. The scheme commenced on: DDMMYY

Relevant facts and circumstances: The deceased purchased the Property in YYYY. At this time, your name was added to the title of the Property as a joint tenant with the deceased. You resided in the Property with the deceased until YYYY. You then began residing in a Property you purchased. The deceased remained residing in the Property until their passing on DDMMYY. The Will of the deceased stipulated that their ownership interest in the Property was to pass to you. On DDMMYY, X days after the passing of the deceased, your pet passed away unexpectedly. After the passing of the deceased and your pet, your mental health was significantly impacted and required professional psychological support. During this time, you were also undergoing your own medical procedures. You were the sole carer and next of kin to the deceased as your extended family resided overseas. You held power of attorney of the deceased and, after their passing, you became involved in legal proceedings relating to the deceased. You were required to provide supporting documents and paperwork in person in Country B to be certified by their government. Subsequently, you travelled to Country B on several separate occasions. You had to sort through the deceased's belongings at the Property, of which there were a substantial amount. Sorting through the deceased's belongings was arduous as you had to ensure no property, subject to the legal proceedings, was lost. You engaged a real estate agent in MMYY however it was then discovered that part of the Property did not have council permit. Urgent works were required to be completed to rectify this. You arranged for construction workers to carry out urgent works between DDMMYY and DDMMYY to improve the appeal of the Property. An auction was held on DDMMYY and the Property was sold on the same day. Settlement of the Property occurred on DDMMYY.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-110 | Income Tax Assessment Act 1997 section 118-185 | Income Tax Assessment Act 1997 section 118-195 | Income Tax Assessment Act 1997 section 118-197

Reasons for decision: Summary: The capital gain or capital loss you made from the capital gains tax (CGT) event in relation to your ownership interest in the Property is not disregarded under section 118-195 of the ITAA 1997 as your ownership interest was not passed to you as a beneficiary of a deceased estate, nor did you own it as the trustee of a deceased estate, at the time your ownership interest started. | Detailed Reasoning - Main residence exemption: Section 118-195 of the ITAA 1997 disregards capital gains and losses made from certain CGT events that happen in relation to a dwelling that: • Was a deceased persons main residence and was not being used to produce assessable income just before they died, or • Was acquired by the deceased before 20 September 1985. If you dispose of an ownership interest in a dwelling that passed to an individual beneficiary or as the trustee of the deceased estate within 2 years of the death of the deceased, any capital gain or loss made on the disposal is disregarded. Where the Property was not disposed of within the 2-year disposal period the Commissioner has the discretion to extend that period if certain circumstances apply per the Practical Compliance Guidelines PCG 2019/5. A capital gain or capital loss you make from a CGT event that happens in relation to a dwelling, or your ownership interest in it, is disregarded if you are an individual and the interest passed to you as a beneficiary in a deceased estate, or you owned it as the trustee of a deceased estate. | Detailed Reasoning - Joint tenants: The main residence exempted afforded under section 118-195 of the ITAA 1997 extends to surviving joint tenants under section 118-197 of the ITAA 1997. This applies as if the ownership interest that one joint tenant had in a dwelling passes to the surviving joint tenant as a beneficiary in a deceased estate upon their death. | Detailed Reasoning - Application to your circumstances: At the time the deceased purchased the Property, your name was placed on title as a joint tenant. The main residence exemption under section 118-195 is not applicable here as your ownership interest was not passed to you as a beneficiary in a deceased estate. Additionally, the special rule for surviving joint tenants only applies to the ownership interest held by the deceased that is subsequently passed to the surviving joint tenant. It does not apply to the ownership interest held by the surviving joint tenant prior to the death of the deceased. | Summary: The Property was your main residence for part only of your ownership interest. You are eligible for a partial exemption for the time you resided in the Property during your ownership interest. | Detailed Reasoning - Detailed reasoning: Under section 118-110 of the ITAA 1997, a capital gain or loss you make from a CGT event that happens in relation to a CGT asset that is a dwelling or your ownership interest in it is disregarded if: • you are an individual; and • the dwelling was your main residence throughout your ownership period; and • the interest did not pass to you as a beneficiary in, and you did not acquire it as a trustee of, the estate of a deceased person. | Detailed Reasoning - Partial exemption rules: Section 118-185 affords a partial exemption for a CGT event that happens in relation to a dwelling or your ownership interest in it if: • you are an individual; and • the dwelling was your main residence for part only of your ownership period; and • the interest did not pass to you as a beneficiary in, and you did not acquire it as a trustee of, the estate of a deceased person. Pursuant to subsection 118-185(2) of the ITAA 1997, you calculate your capital gain or capital loss using the following formula: Table 1 : Formula to calculate capital gain or loss CG or CL amount x Non-main residence days Days in your ownership period | Detailed Reasoning - Application to your circumstances: Your ownership interest in the Property began when your name was added to the title as joint tenants in 20XX. The Property was your main residence from this time until 20XX when you made another property your main residence. You are eligible for a partial main residence exemption from the time your ownership interest commenced to when you ceased using the dwelling as your main residence. You are eligible for the 50% CGT discount as you held ownership interest in the Property for over 12 months.