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Edited version of your private ruling
Authorisation Number: 1012543938165
Ruling
Subject: capital gains tax
Question 1
Was property A the main residence of the deceased as at the date of their death?
Answer
Yes.
Question 2
Can the estate disregard the capital gain on the sale of property A?
Answer
Yes.
This ruling applies for the following period
Year ended 30 June 2013
The scheme commences on:
1 July 2012
Relevant facts and circumstances
The arrangement that is the subject of the private ruling is described below. This description is based on the following documents. These documents form part of and are to be read with this description. The relevant documents are:
· the application for private ruling received and
· the documents provided with the application for private ruling.
After 20 September 1985, the deceased acquired property A from a deceased estate
After 20 September 1985, the deceased purchased property B.
Property A was never rented and was used by the deceased from the purchase date, up until they passed away in the 2012-13 financial year.
Property B was rented from time to time to relatives.
The deceased spent time at both properties every year but regarded property A as their main residence.
As a result of serious illness, the deceased appointed power of attorney to an individual.
This individual arranged for most bills for the property A to be sent to their home address.
Property A was sold within two years of the deceased's date of death.
Reasons for decision
Question 1
Generally, a dwelling is considered to be your main residence if:
· you and your family live in it
· your personal belongings are in it
· it is the address your mail is delivered to
· it is your address on the electoral roll, and
· services are connected (for example, telephone, gas or electricity).
More than one property
Usually you are only entitled to the main residence exemption on one property for any particular period.
If for a period you have two homes that could be regarded as your main residence you must choose one of the homes for this exemption and CGT will apply to the other property.
If you make this choice, you cannot treat any other dwelling as your main residence for that period (except for a limited time if you are moving from one home to another).
In this case, the deceased owned two properties and spent time at both each year. The deceased made a choice to treat the property A as their main residence. Therefore, this property is considered to be their main residence.
Question 2
Subsection 118-195(1) of the Income Tax Assessment Act 1997 allows you to disregard a capital gain (or loss) made on the disposal of a property acquired from a deceased estate, if certain conditions are satisfied. The conditions relevant to your circumstances are:
· the deceased acquired the ownership interest on or after 20 September 1985 and the dwelling was the deceased's main residence just before their death and was not then being used to produce assessable income and
· your ownership interest ends within two years of the deceased's death, or within a longer period allowed by the Commissioner.
In this case, the property A was acquired by the deceased after 20 September 1985. The property has never been used to produce income, and as discussed above, the deceased made a choice to treat this property as their main residence. As the property was disposed of with two years of the deceased's death, the estate can disregard the capital gain.