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Edited version of private advice
Authorisation Number: 1052226224864
Date of advice: 28 February 2024
Ruling
Subject: CGT - dwelling acquired from a deceased estate
Question
Will section 118-195 of the Income Tax Assessment Act 1997 (ITAA 1997) apply to disregard the capital gain or capital loss made on the disposal of the property by the trustee of the Deceased's estate?
Answer
Yes.
Section 118-195 of the ITAA 1997 provides that the trustee of a deceased estate may disregard the capital gain or capital loss on the sale of a dwelling within two years of the date of the deceased's death in the following circumstances:
• Where the deceased's ownership interest was acquired on or after 20 September 1985 and the dwelling was the deceased's main residence just before the deceased's death and was not being used to produce assessable income at that time; or
• Where the deceased acquired their ownership interest before 20 September 1985.
The Deceased's ownership interests in the Property meet these requirements, therefore the provisions of section 118-195 of the ITAA 1997 will apply to disregard the capital gain or capital loss made on the disposal of the Property by the trustee of the Deceased's estate.
This ruling applies for the following period:
Year ended 30 June 20xx.
The scheme commenced on:
1 July 20xx
Relevant facts and circumstances
The Deceased passed away on DD MM 20XX.
As at date of death, the Deceased owned a property (the Property).
The Deceased acquired the Property as his main residence prior to 20 September 1985 in a joint tenancy with their spouse. The Deceased's spouse died and under the right of survivorship the Deceased acquired their late spouse's ownership interest.
The land area of the Property is less than 2 hectares in size.
On or around DD MM 19XX, the Deceased vacated the Property and it ceased to be their main residence.
The Deceased's family member has resided at the Property since 19XX under an informal rent-free arrangement. Rent was paid by the family member for approximately X months in 19XX.
On DD MM 20XX, the Deceased moved back into the Property as their main residence. The family member continued to reside at the Property as the Deceased's carer.
On DD MM 20XX, The Deceased vacated the Property and moved into aged care.
The Property was sold and settled by DD MM 20XX.
From approximately DD MM 19XX until it was sold, the Property has not been used for the purpose of producing assessable income.
The Trustee of the Deceased's Estate will exercise the absence choice to nominate the Property as the Deceased's main residence from when they vacated the Property.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195