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debris64(Newbie)Newbie
29 Jan 2024

I am finalising a deceased estate. Confused in regards to calculating a CGT obligation.

The property was a rental property. However, during last bout of COVID the daughter of the deceased moved into it. This was approx 7 months prior to her father's passing. She is also a beneficiary. She was going to keep the property as her own and part of the estate but was unable to secure loan to purchase small amount owing.

The property then transferred to me. I am Next of Kin, beneficiary and executor. I sold the property 7 months after my husband passed to meet other financial obligations of the estate. What are my CGT obligations? If I am responsible for paying the CGT, is it calculated on value at time of husbands passing and the sold price?

Thankyou

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3 replies
1,894 views
3 replies

Most helpful response

Most helpful replyATO Certified Response

AnitaATO(Community Support)Community Support
ATO Certified Response1 Feb 2024

Hey @debris64,


CGT can be very confusing.


You mentioned you inherited the property so I'm assuming it was solely owned by your husband. When a property passes to a beneficiary or a legal person representative there may be exemptions that apply when the property is sold. Even if it wasn't the deceased persons main residence.


As this was a rental property, you're unlikely to get a full exemption however you may be entitled to a partial exemption. When calculating the capital gains tax on the property you'll need to know the cost base. The cost base is the value of the property at the time you inherited it. You'll then need to calculate the gain or loss you make when you sell the property. This is the difference between the value of the property when you received it and what you sold it for. You'll then need to multiply this amount by the number of non-main residence days and then divide the amount by the total days.


You can also read more about inherited properties and CGT on our website.

All replies

Most helpful replyATO Certified Response

AnitaATO(Community Support)Community Support
ATO Certified Response1 Feb 2024

Hey @debris64,


CGT can be very confusing.


You mentioned you inherited the property so I'm assuming it was solely owned by your husband. When a property passes to a beneficiary or a legal person representative there may be exemptions that apply when the property is sold. Even if it wasn't the deceased persons main residence.


As this was a rental property, you're unlikely to get a full exemption however you may be entitled to a partial exemption. When calculating the capital gains tax on the property you'll need to know the cost base. The cost base is the value of the property at the time you inherited it. You'll then need to calculate the gain or loss you make when you sell the property. This is the difference between the value of the property when you received it and what you sold it for. You'll then need to multiply this amount by the number of non-main residence days and then divide the amount by the total days.


You can also read more about inherited properties and CGT on our website.

debris64(Newbie)Newbie
18 Feb 2024

Thank you for your reply. Just clarifying… the estate won’t pay CGT as it was transferred to me as beneficiary/next of kin/executor.

however, I use the cost base at time of my husband passing? I had 3 appraisals done at this time, is that adequate for cost base?

if the sale price was less than cost base 7 months later, does this mean I don’t need to pay CGT (market slumped by the time I sold)

thank you

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How do I calculate CGT on the sale of home from a deceased estate? | ATO Community