When someone inherits a dwelling there are some special rules contained within the main residence exemption provisions that can provide a full exemption if certain conditions are met.
If the conditions are not met, the beneficiary might face a nasty capital gains tax (CGT) bill for their good fortune.
In some cases, these conditions require the inherited property to be sold within two years of the date of death to qualify for the exemption, although the Commissioner has the discretion to extend this period in some situations. To simplify the tax requirements for beneficiaries (and executors) and ensure that they don’t have the threat of a large tax bill hanging over their head, the ATO has outlined a safe harbour for inherited property.
The safe harbour allows beneficiaries and executors to apply the exemption if the property is sold more than two years after the date of death without having to seek approval from the ATO, as long as the property is sold within three years of the date of death and certain other conditions are satisfied. This could be relevant where there was a delay in selling the property because of factors beyond the control of the beneficiary or executor such as a challenge to the will or where the complexity of the estate delays the completion of the administration process.
To ask any questions and discuss this matter further, please call us on (07) 3217 5700 or email [email protected]
We help professionals and enterprising business owners by getting the numbers right, adding strategy and insights to maximise business growth, and providing specialist advice that considers your diverse business interests and financial goals.
P+Y Accountants & Business Advisory | P: (07) 3217 5700 | E: [email protected]
Disclaimer: The information contained here is general and not intended to serve as advice. Any information supplied is not a substitute for independent professional advice. We do not warrant the accuracy, reliability, completeness or adequacy of the information or material. All information is subject to change without notice. P+Y and each party providing material displayed here disclaim liability to all persons or organisations in relation to any action(s) taken on the basis of currency or accuracy of the information or material, or any loss or damage suffered in connection with that information or material. Users are encouraged to contact P+Y for advice concerning specific matters before making any decision.