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Inherited property may be exempt from capital gains tax

If you have inherited a property and are preparing to sell, you need to understand the tax treatment for capital gains tax.

Special rules exist that enable some beneficiaries or estates to access a full or partial main residence exemption on the inherited property. Assuming the house was the main residence of the deceased just before they died, they did not then use the home to produce an income, and the other eligibility criteria are met, a full exemption might be available to the executor or beneficiary if either (or both) of the following conditions are met:

  • The dwelling is disposed of within two years of the deceased’s death; or
  • The dwelling was the main residence of one or more of the following people from the date of death until the dwelling has been disposed of:
    - The spouse of the deceased (unless they were separated);
    - An individual who had a right to occupy the dwelling under the deceased’s will; or
    - The beneficiary who is disposing of the dwelling.

An extension to the two year period can apply in limited certain circumstances, for example when the will is contested or complex.

If the deceased did not actually live in the property prior to their death and other eligibility criteria are satisfied, it still might be possible to apply the full exemption where the home was treated as their main residence under the absence rule.

If the full exemption is not available, a partial exemption might apply.

Our tax experts work side by side with our lawyers and conveyancers. We can assist you with any wills and estates enquiries and help you with the conveyance of your property when you do decide to sell.

Contact Hannan today to discuss your individual circumstances
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Contact Hannan today to discuss your individual circumstances
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