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Edited version of your written advice
Authorisation Number: 1051459653254
Date of advice: 13 December 2018
Ruling
Subject: The sale of a CGT asset
Question
Will the proceeds from the sale of the house and land package be on capital account?
Answer
Yes, you purchased the property as a long term investment with the intention of renting it out when construction was complete. You only decided to sell the property after you developed significant health issues. As a result of this the sale of the house and land package will be accounted for on capital account.
This ruling applies for the following periods:
Year ending 30 June 2019
The scheme commences on:
1 July 2018
Relevant facts and circumstances
You owned and rented out Property 1.
A few years later you signed contracts to purchase a house and land package (Property 2).
You purchased Property 2 with the intention to keep as a long-term rental property.
Approximately one year after you signed the contracts for Property 2 you developed a medical condition and were unable to drive.
About six months later you were hospitalised for some time. Soon after being released from hospital you developed a second medical condition, you were hospitalised once more and received weeks of rehabilitation.
Due to these health issues, you decided to sell both Property 1 and Property 2 upon completion of the house. To sell the Property 1, you organized repairs and maintenance to make this property ready for sale.
After completion of the repairs to the Property 1 bushfires caused extensive damage to the Property 1 setting back the sale of this property and adding additional stress.
A short time later Property 2 was completed, placed on the market and sold.
You are not and have never been in the business of building or selling houses.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-10
Income Tax Assessment Act 1997 section 118-130
Income Tax Assessment Act 1997 section 118-195
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