Capital gains – inheriting an investment property….

Capital gains – inheriting an investment property….

Did you know that you may have to pay Capital Gains Tax (CGT) when selling a property that you inherited?

If the property was purchased prior to Sept 1985 by the deceased and subsequently sold within 2 years of the deceased passing, the new owner will not pay any CGT irrespective of whether it was rented at some point in time while the deceased owned it.

If the property was purchased by the deceased after Sept 1985 and it was rented out at some stage while the deceased owned it, even if the deceased claimed it as their Principal Place of Residence at the time of passing, there may be CGT to pay…

However… CGT will still not apply if the property is sold within the 2 year period of the deceased passing and it was the deceased PPR and was not rented just before the deceased passed.

It get tricky if the beneficiaries of the deceased estate hold the property longer than 2 years or if the property was rented out at the time the deceased passes… Partial exemption of CGT may still be applied to the gain on sale of the property. Only a portion of the property may attract CGT, a detailed analysis would need to be undertaken by your accountant… for up to date advice and tax planning contact the team at Evolution Accountants

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