DEDUCTIONS FOR INDIVIDUALS
Tax – Personal Income
Selling an inherited dwelling
Selling an inherited dwelling that was a main residence of the deceased, within two years of death, may be exempt from capital gains tax…
– Selling a dwelling that you inherited?
At a glance:
– Selling an inherited dwelling that was a main residence of the deceased, within two years of death, may be exempt from capital gains tax.
– Check whether the two-year ownership period exemption applies to your situation.
– Contact us if you require any clarification or advice.
If you inherit a dwelling and later sell or otherwise dispose of it, you may be fully or partially exempt from capital gains tax (CGT).
Whether your inherited dwelling qualifies for the main residence exemption will be determined by factors such as:
- Whether the deceased person purchased the property before 20 September 1985;
- Did the settlement of the contract to sell the dwelling happen within two years of the person dying;
- Was the dwelling the deceased person’s main residence just before they died; and
Was the dwelling used to produce income just before the person died?
If the dwelling was inherited after 20 August 1996 and sold within two years of the person dying, the full main residence exemption may be available to the beneficiary even though the beneficiary has never used the property as a main residence.
This two-year ownership period can be extended by the Tax Office if delay in the property settlement was due to circumstances outside your control, such as:
- The ownership of a dwelling or a will is challenged;
- The complexity of a deceased estate delays the completion of administration of the estate; or
- Settlement of a contract of sale over a dwelling is unexpectedly delayed or falls through for circumstances outside the beneficiary’s or trustee’s control.
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– The two-year ownership period may be extended upon application to the Tax Office.
This article was published on 30/01/2018 and is current as at that date