Private ruling: Capital gains tax - deceased estate
Date of advice: 10 December 2025
Published: 2 February 2026
Ruling period: Year ended DD/MM/20YY
Date scheme commenced: DD/MM/20YY

Ruling: Q1: Can you disregard the capital gain made upon the disposal of your ownership interest in the property under section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. Under section 118-195 of the ITAA 1997, 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; and • at least one of the items in column 2 and at least one of the items in column 3 in the table in subsection 118-195(1) of the ITAA 1997 are satisfied. In your case, • the deceased acquired the ownership interest before 20 September 1985 • the dwelling was, from the deceased's death until your ownership interest ends, the main residence of the spouse of the deceased immediately before the death, and then, the individual to whom the ownership interest passed as a beneficiary - that individual. Therefore, one of the items in column 2 and one of the items in column 3 of the table in subsection 118-195(1) of the ITAA 1997 are satisfied. Therefore, any capital gain made upon the disposal of your ownership interest in the property can be disregarded.

Relevant facts and circumstances: On DD/MM/20YY, the deceased passed away, leaving a will. The deceased was not an excluded foreign resident just before their death. The deceased owned a property at XXX (the property), which they acquired in or around the 19XX's (and prior to 20 September 1985). At time of death, the property was the deceased's main residence and has not been used to produce assessable income. The property is less than 2 hectares. The deceased's spouse was living with them at time of death, and they continued to reside there until they passed away. The will named you, Person A and Person B as executors and trustees, and also the beneficiaries. In late 20YY, you moved into the property to care for the deceased's spouse. On DD/MM/20YY, the deceased's spouse passed away. You continued to live at the property as your main residence up until it was eventually sold. On DD/MM/20YY, probate was granted to you, Person A and Person B . Around MM/20YY, you, Person A and Person B met with your solicitor to discuss various issues concerning the estates of the deceased and their spouse. It was determined that steps would be taken to sell the property. On DD/MM/20YY, you, Person A and Person B were alerted that a portion of the property (being a portion that existed on a separate title) was not held by the deceased. You were informed that if you wished to sell the property, this issue would need to be investigated. You, Person A and Person B were later informed that the property comprised of two title references, one which was held in the name of the deceased, and the other which was held in the name of Person C. The portion of the property that was owned by Person C access to the main lot. Accordingly, you would not be able to sell the property until this issue was resolved. Whilst the issue of the property's title was being resolved, you, Person A and Person B took steps towards preparing the property for sale, by engaging various real estate agents to conduct appraisals of the property and clearing the property in order to prepare it for sale. On DD/MM/20YY, once the issues with the property title had been rectified, the title was transferred into the names of you, Person A and Person B as joint tenants. Several years later, on DD/MM/20YY, a contract of sale was signed. On DD/MM/20YY, settlement occurred.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-195