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Edited version of private ruling
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Ruling
Subject: Capital gains tax - Inherited main residence
Question:
Will the capital gain or capital loss made on the sale of your dwelling be disregarded?
Answer:
Yes.
This ruling applies for the following period:
Year ending 30 June 2011
The scheme commences on:
1 July 2010
Relevant facts and circumstances
Your parent purchased a dwelling with your sibling as tenants in common before 20 September 1985. Both held an equal share in the property. The dwelling was the main residence for both your parent and your sibling.
Your parent died some time after 20 September 1985. You were the beneficiary of part of the parent's share of the dwelling. Your sibling was entitled by the will to occupy the property for as long as they wished.
The dwelling continued to be your sibling's main place of residence until recently.
Your sibling moved to a residential nursing home. The property was subsequently sold 11 months later.
The dwelling has not been used to produce income at any time.
For the purpose of this ruling your sibling, or their representative the Public Trustee of NSW, has elected to make an absence choice for the 11 month period while the dwelling was vacant.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 104-10
Income Tax Assessment Act 1997 Section 118-195
Income Tax Assessment Act 1997 Section 118-145
Income Tax Assessment Act 1997 Section 128-15
Reasons for decision
A capital gain or a capital loss that arises when you sell a dwelling that you have acquired from a deceased estate is disregarded in the following circumstances:
· You are an individual and the ownership interest passed to you as part of a deceased estate.
· The deceased acquired the ownership interest before 20 September 1985.
· The dwelling was from the deceased's death until your ownership ends the main residence of
o the spouse of the deceased immediately before death
o an individual who had a right to occupy the dwelling under the deceased's will
o an individual who brought about the CGT event and the ownership interest in the dwelling had passed to that individual as beneficiary.
In your case, as:
· you are an individual.
· your parent acquired the ownership interest before 20 September 1985
· the dwelling was the main residence of your sibling from the time of your parent's death until the dwelling was sold, which ended your ownership interest
· your sibling was entitled by your parent's will to occupy the dwelling for as long as they wished
any capital gain or capital loss made from the sale of the dwelling in disregarded.