The Australian Tax Office (ATO) has issued a Practical Compliance Guideline (PCG) relating to the disposal of dwellings acquired from a deceased estate. 

PCG 2019/5 outlines the factors that the ATO considers when deciding to extend the two-year period to disregard capital gains for disposal of a dwelling acquired from a deceased estate as well as the safe harbour compliance approach.

To qualify for the safe harbour, all of the following conditions must be satisfied:

  • during the first two years, more than 12 months were spent addressing circumstances such as:
    • ownership of dwelling or the will being challenged,
    • a life or other equitable interest in the will delays the disposal of the dwelling,
    • the complexity of the estate delaying administration of the estate, or
    • delays in the settlement of the contract or falls through outside of the beneficiary’s control.
  • the dwelling was listed for sale as soon as practically possible after the circumstances above were resolved
  • the sale is settled within 12 months of the dwelling being listed for sale
  • certain circumstances around the disposal cannot have a material effect on the delay, such as:
    • property market prices,
    • delays from refurbishing,
    • inconvenience on the part of the trustee or beneficiary to organize the sale, or
    • unexplained periods of inactivity by the executor in the administration of the estate.

The ATO will also consider the following factors when considering exercising discretion to extend the two-year period:

  • the sensitivity of personal circumstances,
  • the degree of difficulty in locating all beneficiaries to prove the will,
  • any period the dwelling was used to produce assessable income, and
  • the length of time the ownership interest is held

Further information

Australian Tax Office: Practical Compliance Guideline PCG 2019/5, The Commissioner's discretion to extend the two year period to dispose of dwellings acquired from a deceased estate, 27 June 2019

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Any information on this page in relation to mortgages has been prepared by Macquarie Securitisation Limited (MSL) Australian Credit Licence (ACL) 237863 ACN 003 297 336.

Unless stated otherwise, this information has been prepared by Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502.

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