Selling an Inherited Property: 4 Easy Steps

selling an inherited property | Dandenong Family Lawyers

Selling an Inherited Property

Selling an inherited property can be a complex process and involves various emotional, legal, and financial considerations.

When you inherit a property, several financial factors come into play, including the market value at the time of inheritance, capital gains tax (CGT) implications, and potential tax exemptions.

Understanding these aspects is crucial to navigating the sale smoothly and maximising your returns.

Understanding Capital Gains Tax (CGT) on Inherited Property

In Australia, inherited property is subject to capital gains tax, which can significantly impact your net profit from the sale.

The CGT liability depends on several factors, including when the deceased acquired the property and its market value at the time of inheritance.

Key Takeaway: Understanding CGT’s application to your inherited property can help you plan effectively and avoid unexpected tax liabilities.

When is CGT Applicable?

CGT is generally applicable when you sell an inherited property. However, there are exemptions and reductions available.

For instance, if the deceased acquired the property before 20 September 1985, it may be exempt from CGT. Additionally, if the property was the deceased’s primary residence and you sell it within two years of inheritance, you might be eligible for a full exemption.

Key Takeaway: Familiarise yourself with CGT exemptions and conditions to determine your tax liability accurately.

Calculating Capital Gains

To calculate the capital gain, you need to establish the cost base, which includes the property’s market value at the time of inheritance plus any costs incurred in acquiring and maintaining the property. The capital gain is then the difference between the sale price and the cost base.

Key Takeaway: Accurate calculation of the cost base is essential to determine the correct amount of CGT payable.

Holding Period and Discounts

If you hold the inherited property for more than 12 months before selling, you may be eligible for a 50% CGT discount.

This can substantially reduce the tax burden, making it a crucial consideration in your selling strategy.

Key Takeaway: Timing the sale of your inherited property can provide significant tax benefits through CGT discounts.

Selling vs. Keeping the Inherited Property

Deciding whether to sell or keep the inherited property depends on various factors, such as your financial situation, the property’s condition, and market trends.

Keeping the property might offer long-term appreciation, whereas selling can provide immediate financial relief.

Key Takeaway: Evaluate your personal circumstances and market conditions to make an informed decision about selling or keeping the property.

Need a Lawyer?

Legal and Administrative Considerations

Selling an inherited property involves legal and administrative steps, including probate, transfer of title, and compliance with the deceased’s will.

Engaging a solicitor or conveyancer can help streamline this process and ensure all legal requirements are met.

Key Takeaway: Professional legal advice is invaluable in navigating the administrative complexities of selling an inherited property.

Practical Steps for Selling

  1. Valuation: Obtain a professional property valuation to set a realistic sale price.
  2. Repairs and Maintenance: Address any repairs or maintenance issues to enhance the property’s market appeal.
  3. Real Estate Agent: Engage a reputable real estate agent to market the property effectively.
  4. Marketing: Use strategic marketing to attract potential buyers and achieve a favourable sale price.

Key Takeaway: Following a structured approach to selling can maximise the property’s market value and streamline the selling process.

Emotional Aspects of Selling Inherited Property

Selling an inherited property can be emotionally challenging, especially if it holds sentimental value. It’s important to acknowledge these emotions and seek support from family or professionals to manage the process smoothly.

Key Takeaway: Addressing the emotional aspects of selling an inherited property can help you make clearer and more rational decisions.

Selling an inherited property involves a blend of financial, legal, and emotional considerations. Understanding the implications of capital gains tax, evaluating whether to sell or keep the property, and managing the sale process efficiently are crucial steps to ensuring a successful outcome. Professional advice and support can be invaluable in navigating this complex process.



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