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Edited version of private advice
Authorisation Number: 1051622532660
Date of advice: 9 January 2020
Ruling
Subject: Two year exemption from capital gains tax for a deceased main residence
Question
Will the Commissioner allow an extension of time for you to dispose of your ownership interest in the dwelling and disregard the capital gain you make on the disposal?
Answer
Yes. Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time. Further information about this discretion can be found by searching 'QC 52250' on ato.gov.au.
This ruling applies for the following periods:
1 July XXXX to 30 June XXXX
The scheme commences on:
1 July XXXX
Relevant facts and circumstances
The deceased acquired the property after 19 September 1985.
Child A and B moved back to P to care for their parent in XXXX 20XX. The deceased died on X. A moved out in X. C, had always lived at the Property with the deceased up until the deceased passed away. C refused to move out of the Property after the deceased's death.
The will of the deceased was lost by their lawyer D, whose practice had been absorbed by E.
The deceased's children searched through paperwork to find a very old will which listed F as executor. Due to circumstances F renounced probate on X.
The deceased's children eventually came together and agreed to be co-executors of the estate and to use the old will. A, B and C are co-executors.
The legal process took some time and eventually Letters of Administration with the old will annexed were granted on X. The will did not give a right to an individual to occupy the dwelling.
The deceased's children were a close family.
One of the executors was unable to cope with the enormity of moving out. C refused to discuss moving out. C turned off their phone and refused to co-operate with solicitors or the bank. The police would not get involved.
The other co-executors contemplated taking C to court; however were advised that it would cost $X to take the case to the Supreme Court and have C evicted.
Meanwhile, the estate started receiving default notices from the financial institution. On X, the institution sent a default notice threatening repossession of the Property within a month. This did not make C move.
On X, a branch of E transferred the case to another branch. The executors had to deal with new lawyers who were not familiar with the case. The new branch advised of the financial institution's Notice of Default and intention to exercise its power of sale within 31 days and that the institution would be taking action to sell the Property to recover the debt.
Between X and X, A advised that C and B continued to live in the Property. The institution continued to send default notices which E would occasionally forward to A until they were shut down. A and B were attempting to get C to move out. No real estate agent in the area was interested in putting the house on the market with C still living in the Property as they were a hoarder.
C stayed in the Property to the last minute. C was forcibly removed from the house in X.
It was only after the financial institution was able to take repossession that the Property was able to be sold.
On X, E's branch handling the matter was closed. The E team became H. H were hired to provide conveyancing services after C was removed. B moved out in X.
The Property was listed for sale by I on X. It was sold on X. On X, settlement for the sale of the Property was completed.
The deceased had a mortgage on the Property. The Property was occupied by the deceased throughout their lifetime and was not income producing at the date of death.
A, B and C have never owned any other Property.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195
Income Tax Assessment Act 1997 section 104-10