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Edited version of your private ruling
Authorisation Number: 1012330302424
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Ruling
Subject: Capital gains tax - deceased estate - disposal - shares - main residence
Question 1:
Do the interests that you acquired in your parent's home have the same date of acquisition?
Answer:
No.
Question 2:
Is the first element of the cost base of the two interests in your parent's home the same?
Answer:
No.
Question 3:
Is any capital gain or loss made on the subsequent sale of your parent's home disregarded?
Answer:
Yes.
This ruling applies for the following period:
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
The scheme commenced on:
1 July 2011
Relevant facts:
You and your sibling are joint executors and beneficiaries as tenants in common of the estate of your late parent.
Your late parent passed away on after 20 September 1985.
You have provided a copy of the will of your late parent which forms part of and should be read in conjunction with this private ruling.
The dwelling will be transferred by the estate to you and your sibling.
The half share of your late parent's house will be transferred to you by your sibling within two years.
The shares owned by your parent prior to their death will be transferred in an off market transfer to your sibling's self managed superannuation fund.
You have and will continue to reside at the dwelling until it is sold.
Relevant legislative provisions:
Income Tax Assessment Act 1997 Section 118-110
Income Tax Assessment Act 1997 Section 118-195
Income Tax Assessment Act 1997 Section 128-15
Reasons for decision:
General
You may make a capital gain as a result of a capital gains tax event. A capital gains tax event A1 happens when you dispose of a capital gains tax asset. Shares and interest's in property are a capital gains tax asset (section 108-5 of the Income Tax Assessment Act 1997 (ITAA 1997)).
Acquisition
Generally, you acquire an asset on the day you become the owner. However, an asset owned by the deceased that passes to a beneficiary is acquired on the day the deceased died.
Therefore, you will be taken to have acquired the half interest in the property on the day your parent died and the interest of your sibling at the time that the interest is transferred. Each of the interest's are acquired at market value on the day that you acquire that interest.
Capital gain or loss disregarded
Section 118-195 of the ITAA 1997 states that a capital gain or loss is disregarded if the deceased acquired the dwelling before 20 September 1985 and from the deceased's death until your ownership interest ends the dwelling was your main residence.
As you will continue to reside in the dwelling, acquired from the estate, for your entire period of ownership, any capital gain made is disregarded
Main residence exemption
Section 118-110 of the ITAA 1997 states that you disregard any capital gain or loss realised on the disposal of a dwelling that was your main residence for your entire ownership period.
As you will continue to reside in the dwelling, acquired from your sibling, for your entire period of ownership, any capital gain made is disregarded.
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