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Edited version of private advice
Authorisation Number: 1052008669581
Date of advice: 21 July 2022
Ruling
Subject: CGT - deceased estates
Question
As trustee of the deceased estate, are you entitled to disregard the capital gain or capital loss you made from the disposal of the dwelling (the property) under section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
Relevantly, subsection 118-195(1) of the ITAA 1997 provides that a trustee of a deceased estate disregards a capital gain or loss from a dwelling that a deceased person acquired before 20 September 1985 if from the deceased's death until the trustee's ownership interest ends (the trustee's ownership period), the dwelling was the main residence of an individual who had a right to occupy the dwelling under the deceased's will.
Based on the facts provided, the relevant conditions in subsection 118-195(1) are satisfied. Therefore, you are entitled to disregard the capital gain or capital loss you made from the disposal of the dwelling.
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The deceased passed away some years ago.
The deceased acquired the property before 20 September 1985.
The property was less than two hectares in size.
The property was the deceased's main residence until the time of their death.
The Court granted Probate of the deceased's will (the Will).
Under the Will, the deceased provided a right of residence in respect of the property to the child.
The right of residence in the property was utilised by the child.
Under the Will, the child is not allowed to rent out the property.
The property was sold in late 20XX, with settlement occurring in early 20XX.
The property was occupied by the child in accordance with the right of residence until the date of settlement of the sale of the property.
Relevant legislative provisions
Income Tax Assessment Act 1997 subsection 118-195(1)