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Edited version of private advice
Authorisation Number: 1052289008184
Date of advice: 8 August 2024
Ruling
Subject: CGT - disposal of dwelling acquired from deceased estate
Question
Can you disregard any capital gain or loss you made from the sale of the dwelling under section 118-195 of the Income Tax Assessment Act 1997?
Answer
Yes.
Section 118-195 of the Income Tax Assessment Act 1997 provides that if you own or you have an ownership interest in a dwelling in your capacity as the trustee of a deceased estate (or it passed to you as a beneficiary of an estate), then you can disregard any capital gain (or loss) made on the disposal of the dwelling if certain conditions are met. These conditions include (but are not limited to):
• The dwelling was the main residence of the deceased just before they passed away.
• The dwelling was - from the date the deceased passed away until your ownership period ends - the main residence of the spouse of the deceased just before the deceased passed away.
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 20YY.
The property is located at XXXX NSW (the property).
The deceased acquired the property after 20 September 1985.
The property was the main residence of the deceased just before they passed away and was not used to produce assessable income at that time.
The property was situated on less than two hectares of land.
The deceased and their spouse (Person A) have lived together in the property since it was purchased. Prior to this, they lived at their previous residence together.
In their will, the deceased provided a clause allowing a payment from their estate to be made to Person A. The remainder of their estate (including the property) was provided to you and your sibling.
Shortly before they passed away, the deceased provided Person A an informal right to reside by verbally informing you that Person A should be allowed to reside in the property as long as they required.
Probate was granted on DD MM 20YY. In MM 20YY, the property was transferred into the beneficiaries under the will as tenants in common.
Person A had health issues and you made modifications to the property to aid Person A.
On DD MM 20YY, Person A moved into a nursing home.
The property was placed on the market several months later, with an initial offer accepted on DD MM 20YY and settlement occurring on DD MM 20YY.
The property has never been used to produce assessable income at any time during the ownership period.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 118-195