1 Are you entitled to a partial exemption for capital gains tax arising from the sale of the inherited property under section 118-200 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Yes. Question 2 Will the Commissioner exercise the discretion under subsection 118-200(3) of the ITAA 1997 to allow an extension of time for you to dispose of your ownership interest in the dwelling. Answer Yes. Question 3 Do you need to adjust the partial exemption to increase any non-main residence days due to the Deceased using the Property to produce assessable income under section 118-190 of the ITAA 1997? Answer Yes. This ruling applies for the following period : Year ended 30 June 20XX The scheme commenced on: 1 July 20XX
In XX 19XX, the deceased (the Deceased) acquired a property 'as a beneficiary of their parent's deceased (your Grandparents) estate. The Property is less than two hectares in size. From XX XX 19XX to XX 19XX, your Grandparents used the Property as their main residence. From 19XX, the Property was heritage listed. On XX XX 20XX, the Deceased passed away, and left a will (the Will). The Property was the Deceased's main residence just before they passed away. The Property was income producing just before the Deceased passed away, where X rooms of the Property were rented out (approximately X% of the property). Under clause X of the Will, the Deceased gave you a life tenancy in the Property. Provided that you, as the life tenant "undertake repairs and maintenance reasonably required to preserve the heritage categorisation of the property". The Executor of the Will reserved the right to inspect the Property to ensure that you were abiding by this. At the time of the Deceased's death, the Property was in poor condition, including major water ingress, deteriorating masonry, cracks, poor drainage, failed guttering, chimneys, and roof.
In XX 20XX, the heritage management for the Property, listed extensive, urgent, and immediate remedial works to prevent irreversible deterioration and conserve the fabric of the building. You were obstructed from selling the Property until you completed the remedial works. On XX XX 20XX, the Deceased's Death Certificate was registered. On XX XX 20XX, Probate was issued. On XX XX 20XX, the Certificate of Title was registered in your name and your sibling's name. You and your sibling are the beneficiaries of the estate. The Certificate of Title was delayed due to the complexity of the life tenancy clause in the Will. The remedial works could not start until you were registered as the owner on the title, to allow you to apply for a Development Application. On XX XX 20XX, you received approval for the urgent and immediate conservation works. On XX XX 20XX, the Certificate of Title was issued to you and your sibling. In XX 20XX, you submitted the Development and building permit applications. On XX XX 20XX, you signed a contract with builders. There were delays in commencing the works due to a shortage of building supplies and labour, because of COVID-19.
On XX XX 20XX, the tenants moved out of the Property. The property then remained vacant until it was sold. On XX XX 20XX, the conservation work began. On XX XX 20XX, you received notice of completion. In XX 20XX, the Property was listed for sale. On XX XX 20XX, you entered a Contract of Sale. On XX XX 20XX, the Property settled. Dwelling used to produce assessable income According to the Deceased's records, the Property was used to produce assessable income for the following periods: • XX 19XX to XX 20XX • XX 20XX to XX 20XX • XX XX 20XX to XX XX 20XX. You have no records to confirm if the Property was used to produce assessable income from XX 20XX to XX XX 20XX. However, you are aware that it was rented out and that there were intervals between leases during this period.
Income Tax Assessment Act 1997 section 118-190 Income Tax Assessment Act 1997 section 118-195 Income Tax Assessment Act 1997 section 118-200 Income Tax Assessment Act 1997 subsection 118-200(2) Income Tax Assessment Act 1997 subsection 118-200(3) Income Tax Assessment Act 1997 section 118-205 Issue Capital gains tax - deceased estate - partial main residence exemption Question 1 Are you entitled to a partial exemption for capital gains tax arising from the sale of the inherited property under section 118-200 of the Income Tax Assessment Act 1997 (ITAA 1997)? Summary You are not entitled to a full main residence exemption. However, y ou are entitled to a partial exemption for capital gains tax arising from the sale of the inherited property under section 118-200 of the Income Tax Assessment