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Edited version of your private ruling
Authorisation Number: 1012069778790
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Subject: Capital gains tax - Real property
This ruling applies for the following period
Year ended 30 June 2012
The scheme commenced on
1 July 2011
Relevant facts
You acquired a property as tenants in common
The property consists of a house which was your father's main residence from the date of purchase until sometime later when the property was tenanted.
The property also has an external building which is attached to the main house.
You have provided a document which forms part of, and should be read in conjunction with, this private ruling:
Copy of certificate of title.
The following information has been obtained from this document
§ There is only one title to the property
§ The property is held as tenants in common in the following shares:
§ Details of shares
You will dispose a number of shares to the other tenant in common and you will make a capital gain.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 104-10
Income Tax Assessment Act 1997 Subsection 104-10(4)
Income Tax Assessment Act 1997 Section 108-5
Income Tax Assessment Act 1997 Section 108-7
Reasons for decision
If two or more parties own an asset jointly, CGT applies separately to each of the taxpayer's interests in the asset.
If there is a rearrangement of interests in the land this will cause a change of ownership to occur. When a change of ownership occurs, a disposal takes place, which means that CGT event A1 occurs under the provisions of section 104-10 of the ITAA 1997.
In your situation, you will dispose of an interest in the property to the other tenant in common. As a result of this you will be liable for any CGT as a result of CGT event A1 occurring and a change in ownership of the property.
Note: You have disposed of an interest in both the external building and the main house; any capital gain made on the disposal of the external building will be disregarded as this was your main residence.
You will need to apportion your acquisition costs and sale proceeds to calculate the capital gain made on each interest