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Ruling
Subject: CGT - deceased estate
Question and answer
Can you disregard any capital gain or capital loss made on the sale of the dwelling?
Yes.
This ruling applies for the following periods:
Year ending 30 June 2012
The scheme commenced on:
1 July 2011
Relevant facts and circumstances
The deceased died a number of years ago.
The dwelling was purchased by the deceased a number of years ago and they lived in it as their main residence until their death.
Since the deceased's death, the dwelling has never been used for income producing purposes and has been vacant.
The dwelling was placed on the market a few weeks after the deceased died.
The dwelling was on the market for a considerable time and was eventually sold.
Prior to the sale of the property a number of contracts for the purchase of the property fell through for reasons beyond your control.
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. 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).
In this case, the deceased acquired the dwelling a number of years ago. It was the deceased's main residence just prior to their death and it was not used to produce assessable income. The deceased died a number of years ago. The trustee's ownership interest in the dwelling did not end within two years of the date of death.
The Commissioner will exercise his discretion to extend the 2 year time limit due to circumstances beyond the estate's control. The property was placed on the market a few weeks after the deceased's death and due to a number contracts falling through the property was not sold within the 2 year time limit.
Any capital gain or loss made on the sale of the property can be disregarded.