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Edited version of private ruling
Authorisation Number: 1011467653162
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Ruling
Subject: capital gains tax and deceased estate - main residence
Question
Is any capital gains tax payable by the beneficiary upon inheritance of the dwelling?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2011
The scheme commenced on
1 July 2010
Relevant facts and circumstances
Your Grandparent owned a property which was their main residence until several years ago.
Your Grandparent moved out of the property. After they moved out of the property, it was rented to a third party at arms length for a commercial rental for a number of years.
Several years ago, you moved into the property as your main residence and paid no rental income.
Your sibling moved into the property more than 5 years ago as their main residence and paid no rental income.
You and your sibling inherited the property upon your Grandparent's death.
You are not listed on the property title.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 128-15.
Reason for Decision
Generally, when a change of ownership happens in relation to an asset, a Capital Gains Tax (CGT) event occurs.
However there is an exception when an asset owned by the deceased just befor death passes from the deceased to their legal personal representative, or from that legal personal representative to a beneficiary. You are taken to have acquired the asset on the date of death of the deceased and any capital gain or capital loss is disregarded.
In your situation, you have inherited a dwelling as a beneficiary of your Grandparent's will.. As the asset passed to you as a beneficiary, any capital gain or capital loss made by the estate is disregarded.