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Deceased Estates – Full capital gains tax exemption if dispose of the pre-CGT property within 2 years from date of death

Posted by Northadvisory on July 9, 2018

Did you know of the capital gains tax exemption available for the disposal of pre-CGT properties (originally acquired by the deceased before 20 Sep 1985) within 2 years from the deceased date of death?

Does the pre-CGT property have to have been the main residence at any time?

No it is not necessary for the pre-CGT property to have been the main residence of the deceased just before they died.

The deceased could have used the pre-CGT property to earn income so this capital gains tax exemption can also apply to investment properties.

What do you mean by dispose of?

The Estate will need to have transferred out the property, either by selling to a 3rd party or transfers to the beneficiary (so they inherit as according to the will).

Further to this, if the beneficiary who inherits the property decides to sell the inherited pre-CGT property within 2 years, the capital gains tax on the disposal is also still fully exempt.

What do you mean by “settled”?

For this particular legislation for the capital gains exemption, the relevant date is the date the contract is fully settled and completed, which is the date the property transfer has been finalised and performed.

This is in contrast to the date of exchange of contracts which is normally relevant for the capital gains on the disposal of Real Estate assets, which is the date the contract is signed by the relevant parties.

If you have questions on any of the above issues raised, please do not hesitate to contact us.

Judy She
Senior Accountant
T: 02 9984 7774
E: judys@northadvisory.com.au

 

Martin van der Saag
Partner
T: 02 9984 7774
E: martinv@northadvisory.com.au