Inheritance capital gains and tax

Discussion in 'Accounting & Tax' started by justine77, 27th Jun, 2018.

Join Australia's most dynamic and respected property investment community
  1. justine77

    justine77 Well-Known Member

    Joined:
    2nd Jul, 2015
    Posts:
    588
    Location:
    australia
    relatives inherit a property then are they first needing to pay capital gains tax and tax ?
    If the same property is gifted to relatives in the children’s lifetime then does it mean no capital gain tax is paid ?

    If it’s gifted to a relative and that relative wants to divide it between other relatives after an aged relatives death then what can be put in writing for everyone to b in agreement of what will happen at that time

    Thanks
     
  2. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    There is no CGT on inheritances (relatives or not) as such BUT....

    The beneficiary may inherit the property asset cost base of the deceased OR its market value on the date they died (tax advice will confirm which). That will affect what occurs if any of you later sell. If sold within 2 years of the date of death any value change is disregarded too.

    The will determines who the owners are. Any change to that is a CGT event. You cant relinquish your share of title and still access the duty death exemption so take care. The solicitors will handle this and advise how to do it.

    However if relative A B and C inherit and B doesnt want their share and C wants to buy it then there is a CGT event for B selling to C but that 2 year rule may help. Then C owns two CGT assets - Each a different date and cost. And the transfer may be subject to % of duty and also minor legals. The buyer typically pays that.

    The other way inheritance IS taxed is when the deceased leaves a beneficiary any of their super either directly OR through the estate. The exception is a death benefit dependent (dependent child / a spouse etc). Ask the solicitor about that concern if it applies. Its important sometimes to consider the expected tax liabilities attached to property, shares and super so the correct estate share is determined.
     
  3. justine77

    justine77 Well-Known Member

    Joined:
    2nd Jul, 2015
    Posts:
    588
    Location:
    australia
    wow thanks paul.
     
  4. justine77

    justine77 Well-Known Member

    Joined:
    2nd Jul, 2015
    Posts:
    588
    Location:
    australia
    if the property is sold within 2 years is there still not cgt or tax?
     
  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    All property assets are potentially subject to CGT. Unless exempt. And remember unlike other CGT events the SETTLEMENT date for the sale in the key date for the sale. NOT the contract date.

    CGT exemptions for inherited dwellings
     
    Last edited: 29th Jun, 2018

Price Accounting provide investor + developer tax services world and Australia wide for your property and all tax issues. Contact Paul@PFI below for our new client pack and quoted pricing + client portal access. Trusts, Co and SMSF are our specialty.