Edited version of private ruling

Authorisation Number: 1011672228335

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Ruling

Are you entitled to the main residence exemption on the sale of your ownership interest in the property that you inherited?

No.

Relevant facts and circumstances

A family member purchased their main residence (the property) before 20 September 1985.

The property is less than two hectares and they did not use the property to produce assessable income.

The family member passed away after September 1999.

Under the Will, the property was left to you and to two of your siblings.

The property was used by your family and the families of your siblings on periodical occasions until it was sold. The length of your stay at the property was varying on each occasion.

You did not receive mail at the property.

You are not registered on the electoral roll at this address.

The utilities were in the name of one of your siblings.

You do not own any other property. For the time that you were not at the property you lived in a relocatable home on another family member's property.

Reasons for decision

A capital gain or capital loss needs to be considered when any disposal, sale or transfer of property occurs.

A capital gain or capital loss made from the disposal of an ownership interest in a property that you inherited and was acquired by the deceased before 20 September 1985 is disregarded if:

1. the ownership interest in the dwelling ends within two years of the deceased persons death, or

2. from the deceased's death until the ownership interest ends, the dwelling was not used to produce income and it was also the main residence of one or more of the following persons: 

· the spouse of the deceased immediately before death

· an individual who had a right to occupy the dwelling under the deceased's Will, or

· you, as a beneficiary, if you disposed of the dwelling as a beneficiary.  

In your situation, the above listed conditions have not been satisfied. The capital gain or capital loss made on the disposal of your ownership interest in the property will not be disregarded as:

· Your ownership interest in the property did not end within two years of the family member's death.

· The property was not the main residence of individuals who had a right to occupy the dwelling under the deceased's Will. An individual is considered to occupy a dwelling under a deceased's Will if it is in accordance with the terms of the Will. In this case, the occupancy of the property was determined by an informal arrangement between you and your siblings, not by the Will, and

· The property was not your main residence.

The legal concept of main residence is based on an objective assessment of all of the residences that are available to a taxpayer to reside in. Where a taxpayer has more than one dwelling available to them to reside in, the analysis is used to determine which of those dwellings is their main residence.

Whether a dwelling is a taxpayer's principal place of residence is an issue which depends on the facts in each case. Some relevant factors in determining whether a dwelling is your main residence may include, but are not limited to:

· the length of time the taxpayer has lived in the dwelling

· the place of residence of the taxpayers family

· whether the taxpayer has moved his or her personal belongings into the dwelling

· the address to which the taxpayer has his or her mail delivered

· the taxpayers address on the electoral roll

· the connection of services such as telephone, gas and electricity

· the taxpayers intention in occupying the dwelling.

The relevance and weight to be given to each of these or other factors will depend on the circumstances of each particular case.

With regard to your circumstances and the relevant factors listed above we consider that the property that you have inherited from your father was not your main residence.

Calculating the capital gain or loss on your ownership interest in the property.

When you inherit an ownership interest in a property from a deceased estate and the property was purchased by the deceased prior to 20 September 1985, the first element of the cost base of the property is its market value on the date of the deceased's death. In this case, the first element will be the market value of the property on the date that the deceased passed away.

Furthermore, as you are an individual who acquired the asset after 21 September 1999 and you have owned the asset for at least 12 months prior to the capital gains tax (CGT) event happening, you are able to apply the CGT 50% discount.

Please note that you may have incurred expenses associated with the ownership and disposal of the property. You can include these costs in the cost base of the property

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