A recent private ruling has highlighted the importance of giving careful consideration to the wording of an individuals will.

Right to Occupy CGT Exemption Denied

In the private ruling in question, a life tenancy was granted to the deceased’s spouse. However, as the years progressed, the maintenance on the property became too much of a physical burden for the deceased’s spouse. The trustees of the estate then sold the original property and purchased a replacement property on behalf of the estate. In substance according to the trustees, the life tenancy continued at the replacement property until such time where the deceased’s spouse was placed into a nursing home.

The Commissioner was not willing to apply a capital gains tax exemption available under the Tax Act, as the replacement dwelling was purchased by the trustee of the deceased estate after the death of the deceased, and was not acquired by the deceased.

Had the wording in the will provided the Trustee’s the discretion to sell the existing dwelling and buy another, the CGT exemption would apply.

This is general advice only. Your personal circumstances have not been taken into consideration.