• Legal database
Legal database

ATO Interpretative Decision

ATO ID 2001/335 (Withdrawn)

Income Tax

Capital gains tax - inherited dwelling
FOI status: may be released
  • This ATO ID is withdrawn as it does not accurately express the ATO view. Please refer to the Guide to capital gains tax for assistance with the issues dealt with in this ATO ID.
    This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Will a capital gain or capital loss from the sale of an inherited dwelling be disregarded under section 118-195 of the Income Tax Assessment Act 1997 ( ITAA 1997)?

Decision

Yes, a capital gain or capital loss made from the sale of an inherited dwelling is disregarded if the dwelling is disposed of within 2 years of the deceased's death.

Facts

The deceased person acquired the dwelling on or after 20 September 1985. The deceased person's death occurred after 20 August 1996. The dwelling was their main residence at the time of death. The dwelling was not being used for income producing purposes up to the date of death.

The ownership of the dwelling passed to the taxpayer as a beneficiary of the deceased person's estate. The dwelling has remained vacant since the date of death. The taxpayer is not intending to use the dwelling as their main residence.

Reasons for Decision

Section 118-195 of the ITAA 1997 allows a taxpayer to disregard a capital gain or capital loss made from a CGT event that happens in relation to a dwelling where:

•
The ownership of the dwelling passed to the taxpayer as the beneficiary of the deceased person's estate,
•
The deceased person acquired the dwelling on or after 20 September 1985,
•
The deceased person died after 20 August 1996,
•
The dwelling was the deceased person's main residence just before death,
•
The dwelling was not used for income producing purposes, and Either:

-
the taxpayer disposes of their interest in the dwelling within 2 years of the deceased's death, or
-
where the dwelling is the taxpayer's main residence from the date of death until the taxpayer's ownership ends.

The taxpayer will satisfy the criteria to have a capital gain or loss disregarded if the dwelling is disposed of within 2 years of the deceased's death.

Note: as the dwelling is not the taxpayer's main residence, the extended option for disregarding capital gains and capital losses is not available to the taxpayer.

Date of decision:  13 July 2001

Legislative References:
Income Tax Assessment Act 1997
   section 118-195

Keywords
CGT deceased estates

Business Line:  Small Business/Individual Taxpayers

Date of publication:  15 September 2001

ISSN: 1445-2782

history
  Date: Version:
  13 July 2001 Original statement
You are here 16 January 2004 Archived

Back to top