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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 property received under a will?
No.
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 used as the deceased main residence from the date they purchased it a number of years ago.
The estate has been fully administered.
The property needed some repairs carried out on it.
The property was sold more than 2 years after the deceased's death.
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 purchased by the deceased a number of years ago.
The property was the deceased's main residence.
The property needed repairs carried out on it.
The property was sold more than 2 years after the deceased died.
The discretion under Subsection 118-195(1) of the Income Tax Assessment Act 1997 is not available to you as a delay in sale due to repairs being carried out on a property prior to placing it on the market is not a circumstance for which the Commissioner will exercise the discretion.
Any capital gain or loss made on the sale of the property will not be disregarded and must be included in your income tax return.