Edited version of private advice

Authorisation Number: 1051856082953

Date of advice: 25 June 2021

Ruling

Subject: Commissioner's discretion to extend the two-year time limit to dispose of an inherited house

Question

Will the Commissioner allow an extension of time to mid-20XX for you to dispose of your ownership interest in the house 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:

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

At some time before 1985, the deceased and their spouse bought the house.

From 20XX to mid-20XX, you cared for the deceased and their spouse. You visited and stayed with them up to X times per week until the deceased's spouse passed away. During this time, you were diagnosed with xxxx and xxxx.

In early 20XX, the deceased's spouse passed away and their 50% ownership interest in the house passed to the deceased. The house was the deceased's main residence until they passed away in late 20XX.

In late 20XX, you interviewed real estate agents regarding preparing the house for sale. Shortly after, you had numerous visits to hospital with personal medical issues.

You underwent a serious medical procedure. After the procedure, you were directed to rest and not do anything strenuous for a few months. Shortly after, you were granted probate as executor and sole beneficiary of the deceased's estate.

You then experienced further health issues and underwent a medical procedure. After the procedure, you were directed to have more rest.

From March to October 20XX, as a result of COVID-19 there were various levels of restrictions regarding leaving your home and travel. During this period, you intended to prepare the home for sale, but postponed your plans until the restrictions eased.

In late 20XX, when restrictions had eased, you re-engaged real estate agents and began preparing the home for sale. During this time, you experienced anxiety and depression. You travelled from your home to the house (20km) X-X days per week loading up your car and clearing things out over a period of X months. You also arranged some minor repairs to security shutters and roller door and replaced the air conditioner.

In early 20XX, you listed the house for sale. Shortly after, you exchanged contracts for the sale of the house.

The agreed settlement date is mid-20XX. (Less than X years after the deceased passed away).

Relevant legislative provisions

Income Tax Assessment Act 1997 section 102-20

Income Tax Assessment Act 1997 section 104-10

Income Tax Assessment Act 1997 section 118-120

Income Tax Assessment Act 1997 section 118-130

Income Tax Assessment Act 1997 section 118-195