Private ruling: Capital Gains Tax (CGT) - main residence exemption
Published: March 2013
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Will you be entitled to the main residence exemption in respect of your interest in a dwelling as provided in Subdivision 118-B of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes


Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 118-B

Reasons for decision: Summary: Subdivision 118-B of the ITAA 1997 contains the rules for situations when capital gains and losses are ignored for main residence dwellings. There are special rules for dwellings that pass from or are owned by a trustee of a deceased estate. In particular section 118-210 of the ITAA 1997 provides for an exemption when a property is acquired by the trustee of a deceased estate, and under the deceased's Will, for occupation by the life tenant. Section 118-210 of the ITAA 1997 is applicable in this case as you, as trustee of the deceased's estate, acquired an ownership interest in a dwelling for occupation by the deceased's child, in accordance with the deceased's will. Subsection 118-210(3) of the ITAA 1997 provides that if you receive money or property for a CGT event happening to such a dwelling the trustee does not make a capital gain or capital loss if the dwelling was the main residence of the individual from the time the trustee acquired an ownership interest in it until the time of the event. For the purposes of the provision only those CGT events listed in subsection 118-210 of the ITAA 1997 are relevant. In your case, the property was the main residence of the deceased's child from the time you acquired an ownership interest in the property until the time you entered into a contract to sell the property. You are therefore entitled to full main residence exemption with any capital gain or loss disregarded.

Relevant facts: You were the executor of the deceased Estate of a relative. | Under the will you were directed to sell the deceased's home and from the proceeds purchase, in your name in your capacity as Executors, a residence for one of the deceased's children. | You therefore purchased an older property. | After some time the decision was made to sell the property for something more modern. | At no time did you consider the property to be your own, as it was purchased only in your name under the terms of the deceased's will.