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Ruling
Subject: CGT - Main residence
Question:
Are you entitled to a main residence exemption?
Answer:
No.
This ruling applies for the following period
1 July 2011 to 30 June 2012
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
Post 20 September 1985 your spouse purchased a property.
Your spouse passed away.
You inherited the property.
The property was purchased for the sole use of your child, for life.
A number of years later your child passed away.
Three months later the property was sold.
You and your spouse never lived in the property.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 118-110(1)
Income Tax Assessment Act 1997 Section 118-195
Reasons for decision
You make a capital gain or loss if a capital gains tax (CGT) event happens to a CGT asset that you own. Land and dwellings are CGT assets. A CGT event A1 is the most common CGT event, which occurs when you dispose of a CGT asset to someone else.
Main residence
Under subsection 118-110(1) of the Income Tax Assessment Act 1997 (ITAA 1997) it states that any capital gain or capital loss you make from a CGT event that happens in relation to a CGT asset that is a dwelling or your ownership interest in it is disregarded if:
· You are an individual, and
· The dwelling was your main residence throughout your ownership period, and
· The interest did not pass to you as a beneficiary in, and you did not acquire it as a trustee of, the estate of a deceased person.
Deceased Estate
Section 118-195 of the ITAA 1997 outlines the treatment of dwellings acquired from a deceased estate; it reads as follow:
(1) A capital gain or capital loss you make from a CGT event that happens in relation to a dwelling or your ownership interest in it is disregarded if:
(a) you are an individual and the interest passed to you as a beneficiary in a deceased estate, or you owned it as the trustee of a deceased estate; and
(b) at least one of the items in column 2 and at least one of the items in column 3 of the table are satisfied.
Beneficiary or trustee of deceased estate acquiring interest | ||
Item |
One of these items is satisfied |
And also one of these items |
1 |
The deceased acquired the ownership interest on or after 20 September 1985 and the dwelling was the deceased's main residence just before the deceased's death and was not then being used for the purpose of producing assessable income |
Your ownership interest ends within 2 years of the deceased's death |
2 |
The deceased acquired the ownership interest before 20 September 1985 |
The dwelling was, from the deceased's death until your ownership interest ends, the main residence of one or more of: (a) the spouse of the deceased immediately before the death (except a spouse who was living permanently separately and apart from the deceased); or (b) an individual who had a right to occupy the dwelling under the deceased's will; or (c) if the CGT event was brought about by the individual to whom the ownership interest passed as a beneficiary - that individual |
Application to your circumstances
You and your spouse never lived in the property, therefore you have not satisfied a least one item in column two of the table.
Accordingly you are not eligible for the main residence exemption.