ATO Community

Capital Gains Tax on Inherited Dwelling, which was also inherited

Ask a question
Highlighted

tjs
Newbie

Views 430

Replies 1

Hi,

 

I'm trying to wrap my head around calculating Capital Gains Tax for an inherited dwelling, which in itself, was also inherited, and used as a rental property.

 

All figures and names are ficticious and used as an example only.

 

The Story: Jorjie built a dwelling prior to 20 September 1985. Jorjie had passed away 12/04/2007, and had owned and lived in a dwelling. When Jorjie had passed away, her sister, Penny had inherited the dwelling 2 months after she passed away. Penny did not, and had never lived in the property when she inherited it, instead, she rented out the dwelling. Penny had passed away on 11/02/2017, and her daughter, Tamara, inherited the property on 11/02/2017. Once the estate was finalised, Tamara sold the property on 15/05/2017, and had a capital gain of $650,000. While the estate was being finalised, the existing tenant was living in the dwelling. Penny had done significant work to the value of $50,000 on the dwelling while it was being tenanted.

 

The Question: I'm a little confused as to how I calculate the partial exemption to Capital Gains Tax. Are any of you able to shed some light on this? I think I'm overcomplicating things.

 

- T

1 ACCEPTED SOLUTION

Accepted Solutions

Best answer

ATO Certified

Community Support

Replies 0

Hi @tjs,

 

Welcome to our Community!

 

We can provide general information here on our Community about tax and super topics and we'd need to know more information about your situation to be able to provide an answer.

 

Generally, the calculation is adjusted when working out the partial main residence exemption for a deceased and their beneficiaries. It's calculated based on the number of days the dwelling was the main residence of the one who sold (or made the CGT) and the previous beneficiaries. You can find an example on our website when calculating CGT when inheriting a dwelling that was previously inherited on our website.

 

Alternatively, if you'd like to receive a more tailored response relating to your specific circumstances, you can write to us to request a private ruling. Private rulings are binding advice from us that explains our view on how the tax law applies to your specific situation. They are a free service and we aim to respond within 28 days from receiving your request.

 

Thanks, JodieH.

1 REPLY 1

Best answer

ATO Certified

Community Support

Replies 0

Hi @tjs,

 

Welcome to our Community!

 

We can provide general information here on our Community about tax and super topics and we'd need to know more information about your situation to be able to provide an answer.

 

Generally, the calculation is adjusted when working out the partial main residence exemption for a deceased and their beneficiaries. It's calculated based on the number of days the dwelling was the main residence of the one who sold (or made the CGT) and the previous beneficiaries. You can find an example on our website when calculating CGT when inheriting a dwelling that was previously inherited on our website.

 

Alternatively, if you'd like to receive a more tailored response relating to your specific circumstances, you can write to us to request a private ruling. Private rulings are binding advice from us that explains our view on how the tax law applies to your specific situation. They are a free service and we aim to respond within 28 days from receiving your request.

 

Thanks, JodieH.

Top Solution Authors