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Ruling
Subject: CGT - deceased estate
Question:
Can you disregard any capital gain or capital loss made on the sale of the dwelling?
Answer:
Yes.
This ruling applies for the following periods:
Year ended 30 June 2012
The scheme commenced on:
1 July 2011
Relevant facts and circumstances
The deceased died a number of years ago.
The property was the main residence of the deceased and was never used to produce income.
A dispute arose between the beneficiaries and the property was not sold within the 2 year time period.
A court order was issued for the sale of the property resolving the dispute.
The property was sold a few months after the order was issued.
Relevant legislative provisions:
Income Tax Assessment Act 1997 Subsection 118-195(1).
Reasons for decision
Subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997) states that if you are an individual who owns a dwelling in a capacity as trustee of a deceased estate, then you are exempt from tax on any capital gain made on the disposal of the property acquired by the deceased after 20 September 1985 if:
· the property was the deceased's main residence just prior to their death
· it was not being used to produce assessable income at this time, and
Your ownership interest ends within 2 years of the deceased's death (the Commissioner has discretion to extend this period in certain circumstances).
You have an ownership interest in a property if you have a legal interest in the property. This means that if you sell a property, your ownership interest continues until the date of settlement (rather than the date the contract of sale is signed).
The property was the main residence of the deceased and was not used to produce income.
Due to court proceedings the property was not sold within 2 years of the deceased's death.
The Commissioner will exercise his discretion to extend the 2 year time limit due to complexities and difficulties arising from the estate.
Any capital gain or loss made on the sale of the property can be disregarded.