The basic exemption rules in s 118- 195 provide that if the dwelling was either a pre-CGT asset of the deceased or the deceased\u2019s main residence at their date of death (and that was not then being used to produce assessable income), then if the dwelling is sold or otherwise subject to a relevant CGT event within two years of the deceased\u2019s death, then there will be no CGT on its sale etc.<\/p>\n\n\n\n
Note: This two-year period is measured by reference to the settlement date of the contract of sale and it can be extended by the Commissioner (or an additional 18 months can be self-assessed in accordance with the principles in Practical Compliance Guideline 2019\/5).<\/p>\n\n\n\n
The rules in s 118-195 also provide that a full CGT exemption is likewise available if the dwelling is subject to a CGT event after it has been occupied as a main residence, from the time of the deceased\u2019s death until that CGT event, by any of the following persons:<\/p>\n\n\n\n
- \n
- a surviving spouse, or<\/li>\n\n\n\n
- a person who was granted a right to live in it under the will, or<\/li>\n\n\n\n
- a beneficiary who inherited the dwelling.<\/li>\n<\/ul>\n\n\n\n
![\"CGT](\"https:\/\/mnygroup.com.au\/wp-content\/uploads\/2021\/11\/realtor-gd89360880_1280-1024x634.png\")
<\/figure>\n\n\n\nHowever, if the deceased was an excluded foreign resident just before their death, these full CGT exemption rules do not apply (s 118-195(1)(c)). Note: An excluded foreign resident is a person who has been a foreign resident for a continuous period of more than six years (s 118-110(4)).<\/p>\n\n\n\n
CALCULATION OF PARTIAL EXEMPTION<\/strong><\/h2>\n\n\n\n
Where a full CGT main residence exemption does not apply, the partial calculation rules in s 118-200 must be used to calculate the partial exemption.<\/p>\n\n\n\n
In the case of a post-CGT dwelling of the deceased, the partial exemption calculation formula in s 118-200(2) requires you to treat as non-main residence days the following days:<\/p>\n\n\n\n
- \n
- the days that the deceased owned the dwelling when it was not his or her main residence (s 118-200(a)) \u2014 ie, eight years from 1 July 2012 until his death on 1 July 2020, and<\/li>\n\n\n\n
- if the deceased was an excluded foreign resident, the \u201cremaining days\u201d in the deceased\u2019s ownership period (s 118-200(2)(aa)) \u2013 ie, 15 years from 1 July 1997 until 1 July 2012, and<\/li>\n\n\n\n
- the period after the deceased\u2019s death until its sale when it was not the main residence of a surviving spouse, a person with a right to occupy it or a beneficiary (s 118- 200(2)(b)) \u2013 ie, nil days in this case because you, as the beneficiary, have lived in it as your main residence in this time.<\/li>\n<\/ul>\n\n\n\n
In short, the total non-main residence days in this case where the deceased is an excluded foreign resident at his date of death will be the deceased\u2019s entire 23-year period of ownership of the dwelling.
The total days of ownership of the dwelling for the purposes of the partial exemption calculation will be from when the deceased acquired it on 1 July 1997 until its sale by you on 30 June 2021 \u2014 being 24 years.<\/p>\n\n\n\nSo, if we assume that you make a capital gain on the dwelling of $450,000 (calculated by reference to sale proceeds of $1m), your partial capital gain calculated under s 118- 200(2) will be:<\/p>\n\n\n
\n![\"\"](\"https:\/\/mnygroup.com.au\/wp-content\/uploads\/2021\/11\/Screenshot-559.png\")
<\/figure>\n<\/div>\n\n\n[Note for simplicity, this calculation is in years instead of days as required.]<\/p>\n\n\n\n
However, the CGT 50% discount will be available because the dwelling is treated as having been owned for more than 12 months in this case (s 115-30(1), Item 4).<\/p>\n\n\n\n
(See also Example 1.7 at para 1.43 in Treasury Laws Amendment (Reducing Pressure on Housing Affordability No. 2) Bill 2018<\/em>, which introduced the amendments to deny a foreign resident a CGT main residence exemption.)<\/p>\n\n\n\n
\n\n\n\nThis information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.<\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":14,"featured_media":8690,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1692],"tags":[],"class_list":["post-8689","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-personal-tax","masonry-post","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-20"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/posts\/8689","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/users\/14"}],"replies":[{"embeddable":true,"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/comments?post=8689"}],"version-history":[{"count":0,"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/posts\/8689\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/media\/8690"}],"wp:attachment":[{"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/media?parent=8689"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/categories?post=8689"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mnygroup.com.au\/en\/wp-json\/wp\/v2\/tags?post=8689"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}