Edited version of private advice

Authorisation Number: 1051933165004

Date of advice: 14 December 2021

Ruling

Subject: Deceased estate - two-year discretion

Question

Will the Commissioner allow an extension of time for you to dispose of your ownership interest in The Property and disregard any capital gain on disposal?

Answer

Yes

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

Your parents purchased a property (The Property). The Property was purchased many years ago.

Your parents purchased The Property as joint tenants. It was always used as their main residence.

Parent A passed away prior to Parent B.

Parent B passed away several years ago, leaving an interest in The Property to you and your siblings in equal shares.

Following Parent B's passing, you and your siblings were transferred an equal ownership interest each in The Property, as tenants-in-common.

Following Parent B's passing, you and your siblings discussed two options for dealing with The Property - selling The Property and each sibling would receive an equal share, or one of your siblings purchasing the other two siblings' shares.

Sibling A advised that they did not want to sell The Property as they were living there and did not want to leave.

Sibling A told you that they and Sibling B would seek to purchase your ownership interest in The Property.

You gave Sibling A time to organise purchase of your ownership interest in The Property. You advise, however, that they employed delaying tactics and there where difficulties with communication, which frustrated the purchase of your interest.

As you were aware of the two-year period for disregarding a capital gain or capital loss in relation to disposal of a dwelling or your ownership interest in a dwelling that passed to you as a beneficiary of a deceased estate, you commenced legal action in an attempt to resolve the issue.

You engaged several different solicitors. The initial solicitors suggested you get a valuation and attempt to negotiate with Sibling A in good faith. You had a valuation report prepared. You presented Sibling A with the valuation report, but they did not accept this or respond to your requests.

Sometime afterwards, Sibling A advised you that they would arrange for a solicitor to communicate with you in writing regarding the purchase of your ownership interest. However, this communication was not forthcoming.

You instructed your solicitors to advise Sibling A that you may make an application to the Court to appoint trustees of the land for the sale of the property if they did not communicate with you on or before a nominated date regarding purchase of your ownership interest.

You received a letter from Sibling A's lawyers advising that Sibling A was prepared to purchase your ownership interest. They advised that Sibling A would pay the amount within a few weeks. Further time elapsed and due to your solicitor leaving the practice, you looked for another firm to represent you that was based in your hometown.

You then engaged new solicitors on a preliminary basis. You experienced significant delays between contacting them initially and removing them as your solicitors some months later.

During this time, you made repeated attempts to communicate with Sibling A to progress the matter without success. You tried to engage your solicitors to progress the matter, but this was not successful, so you terminated their services.

You then engaged another legal firm. They managed to negotiate a settlement whereby Sibling A would pay you an agreed amount for your ownership interest in The Property. You signed a deed of settlement agreeing to transfer your ownership interest.>

You are estranged from Sibling A and Sibling B and are not sure what action they have taken regarding their ownership interests in The Property.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 118-195