Hi,
Does anybody have an idea about whether or not capital gains tax is payable on an inherited IP.
Circumstances are:
My parents purchased the property in as their main residence in 1976. In 1994 my father passed away & his half of the property then passed to my Mother. She used the property as her main residence until April 2005 & then used it as a rental property until July 2006 when she passed away. However she never purchased another property so I assume it is tax exempt under the six year rule and it may also be tax exempt as it was purchased pre CGT.Probate has gone through & ownership will be transferred to my brothers & myself in a couple of weeks.
We intend to sell the property within 6 months.
Will we be liable to pay CGT?
I have done some reading on the ATO website which indicates we may have no tax liability if it is sold within 2 years of my Mothers Date of Death?
Paul[confused2]
Hello Paul13
Sorry for your loss.
I am no accountant but have been reading this section of the ATO site just out of interest.
My understanding is that you will not need to pay any CGT. Because the property was purchased pre 1985 it seems irrelevant whether it was your parents PPOR or not.
You should not need to pay any CGT if you either sell it before 2 years or live in it yourself as your PPOR until you do sell it.
If you change your mind and decide to keep it as an IP the value of the property at the time of your mothers death will become the cost base for any future CGT calculations.
Just my opinion. Your accountant/solicitor will be able to give you a definitive answer.
Hope this helps [smiling]
ElkaThanks Elka,
I appreciate your reply. Your answer coincides exactly with another property investor friend of mine.
However, I will take your advice & seek confirmation from an accountant.
Also, thanks for your condolences
Paul
As your father’s ownership of part of the property passed to your mother after CGT that aprt could be subject to CGT subject to the PPOR exemptions.
However, it does appear from what you have written that the PPOR exemption would apply
Thanks CRJ,
The first transfer of ownership in 1994 did concern me. However , like you, I think CGT is not applicable.
As suggested by Elka I will consult with an accountant in Brissie & will post the answer on this thread.
Paul
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