Sale of Inherited Property – CGT exemptions

If certain conditions are met under the ITAA1997, its possible to receive a full CGT exemption when an individual sells an inherited property (property in this article refers to residential real property for example a property received as a beneficiary of a deceased estate). It is also dependent upon whether the deceased acquired the property pre or post-CGT.

The following table summarises these exemptions, however you should seek legal advice as to the applicability of this to your situation. BNT Legal are happy to assist in determining whether the conditions of the ITAA1997 are met.

Date Deceased Acquired Property Conditions needed to meet full exemption
Before 20 September 1985 (pre-CGT) i) The property is sold within two years of the deceased’s date of death; orii) The property was the main residence of a specified individual from the deceased’s date of death.
On or after 20 September 1985 (post-CGT) i) The property was the main residence of the deceased just before the death of the deceased and the property was not being used for producing income; and

ii) Either of the following apply:-

a) The property was sold within 2 years of the deceased’s date of death; or

b) The property was the main residence of a specified individual from the deceased’s date of death.

Some notes on the above table:-

  1. There are special requirements to be met to be classed as a specified individual for the purposes of the above table;
  2. A pre-CGT property asset not the main residence of the deceased (ie a rental property) may also qualify for the full exemption if certain conditions are met;
  3. Within 2 years means the settlement of the property, not the contract date;
  4. The 2 years of sale time period may be extended in extenuating circumstances (ie circumstances beyond the control of the beneficiary);
  5. If the deceased acquired a property post-CGT and is not their main residence, subject to certain conditions it may still be eligible for a full exemption;
  6. Partial exemptions for CGT may apply if full exemptions are not possible.

BNT Legal

BNT Legal can assist in all facets of deceased estates including taxation, probate applications, property transfers and settlement. Contact the team at BNT Legal today.

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