Inheriting a Home

Inheriting a homeGREY3

Inheriting a Home


Inheriting a dwelling is one of the issues that can often arise as generations change and there are usually no capital gains tax implications at the time you inherit it. However, this does not mean that there are no tax consequences arising in relation to selling or disposing of the property.


It is important to remember that Australia does not operate a death tax and therefore capital gains tax does not apply when a property is inherited if, when the former owner dies (subject to certain exceptions), the property passes:

  • to the deceased's legal personal representative – (ie executor of the estate), or
  • to a beneficiary directly or from the deceased's legal personal representative.


This exception doesn't apply if the property passes from the deceased to a tax-advantaged entity (such as a charity) or a foreign resident.


Below is a tabularized summary of the various circumstances and outcomes that may arise, however, please consult your ESV adviser before undertaking any transactions.


Potential Tax Treatment Table 3


As always there are exceptions to the above and therefore caution should be exercised.  In addition it should be noted that whilst the above table highlights that in a number of circumstances any gain on disposal can be disregarded, the flip side also arises (ie that certain gains can be taxable). 


Accordingly, when dealing with dwellings that have been inherited, professional advice should be sought to ensure that any potential tax is minimized or avoided.  Should you have any questions in relation to the above please contact your relevant ESV engagement partner on 9283 1666.


Article by David Prichard