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Topics on deceased estates and estate beneficiaries (2)

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Deceased was an excluded foreign resident at death continues

However, to ensure that no portion of the MRE of the deceased (that was an excluded foreign resident) is included in the calculation of the dwelling’s capital gain or loss, the following adjustments are also made to the relevant provisions:

  • Cost base and reduced cost base – the first element of the dwelling’s cost base and reduced cost base for the beneficiary is the cost base and reduced cost base of the deceased immediately before the deceased’s death. The beneficiary’s cost base would only be the market value of the dwelling at the deceased’s death if the deceased was not an excluded foreign resident. Refer to paragraph (b) in Item 3 of table under S.128-15(4).
  • Building, repairing or renovating a dwelling – a surviving joint tenant of a dwelling is not able to treat the dwelling as the deceased’s main residence where that dwelling was being built, repaired or renovated, if the deceased was an excluded foreign resident at the time of their death. Refer to S.118-155(5).
  • The apportionment calculation – the days for which the deceased person held the ownership interest in the dwelling are treated as non-main residence days. This is to ensure that no component of the MRE applies for this period. Refer to S.118-200(2) (aa).

Furthermore, the MRE does not apply if the deceased was an excluded foreign resident at the time of their death and the beneficiary is also an excluded foreign resident at the time of the CGT event. In this case, the beneficiary must account for the whole of the capital gain or loss that accrues on the ownership interest in the dwelling.

If the trustee of a deceased estate (where the deceased was an excluded foreign resident) acquires a dwelling after the death of the deceased for an individual to occupy under the terms of the Will, the MRE also does not apply where the trustee later disposes of the relevant dwelling. Refer to S.118-210(6).

 

  • Should you have any queries, please contact Tax Ideas Accountants & Advisers on +61 2 83181545
  • Alternatively, you can book an appointment in our live calendar.

 

Written by Panbo Ye

I help people discover POWERFUL unknowns in Tax Ideas | Wealth Strategies | Retirement Planning | Finance Solutions!

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