Inheriting Property? Here's What You Really Need to Know to Avoid ALL the Inherited Property Taxes
- Future Accounting
- Jun 8
- 3 min read
Updated: Aug 13
These smart moves will minimise inherited property taxes in Australia
Property inheritance in Australia is such a rewarding experience for individuals; however, inheritance of property is always accompanied by tax implications.
1. Thinking of Selling an Inherited Property?
Watch out for Capital Gains Tax (CGT)!
If you’ve inherited a property and are planning to sell it, CGT might come knocking.
But here’s the good news - if the property was the deceased’s main home and you sell it within two years, you may not have to pay any CGT at all! Miss that two-year window or if the property wasn’t their primary residence? CGT could still apply.
2. Use the Main Residence Exemption to Your Advantage
One of the major advantages of inheriting property is the capital gains tax main residence exemption. You may be able to sell the house and never pay any CGT if you actually live in the house and use it as your principal residence without ever renting the house or employing it as an investment property. That’s a huge plus.
But if you rent the property or develop an intention to utilize the property commercially, then probably this exemption won’t be available to you. You need to make plans regarding the property at the beginning because this determination itself will have a direct effect on your future position about getting tax benefits or otherwise.
3. Future-Proof Your Estate with a Family Trust
Looking ahead, a family trust can be a strategic way to handle inherited property. It allows you to allocate income from those assets among beneficiaries, which might help lower the overall tax bill, depending on each person’s tax situation.
All the same, trusts are by no means a blanket solution. They are best devised carefully and professionally. Be sure to consult an expert before proceeding.
4. Reduce Taxes with Gifts, Donations & Bequests
Want to leave a lasting legacy and reduce taxes? Charitable gifts and donations can do both!
Giving to registered charities can lower the value of your estate, which might mean less CGT for your beneficiaries down the line. A generous move that’s also tax-smart.
5. Don’t Forget Stamp Duty (It’s a Sneaky One!)
Stamp duty tends to go under the radar when considering inheriting property, but actually, it shouldn’t. It tends to come into play when property has changed ownership, so take a look at checking if any exemptions or concessions may be relevant to your state.
Rules vary throughout Australia, so verifying the actual rules before reaching a final decision is important.
6. Consider a Trust to Defer CGT
And if you're handling an estate, placing inherited property under a trust could give more control - capital gains tax won't likely be triggered until the property has been transferred or sold.
It’s a realistic alternative, particularly in bigger estates, and provides added time before deciding about the next course of action. Nevertheless, it’s no solution across the board. For individuals looking at tax liability minimisation in the long term, however, it’s an approach to take into consideration.
7. When in Doubt, Talk to a Pro
Let’s be real - inheritance and taxes can get tricky fast. It’s completely normal to need a hand. As Chartered Accountants, we’re here to guide you through everything from capital gains tax to stamp duty, and all the little details in between.
Honestly, reaching out to an expert early on isn’t just smart - it can save you a lot of stress (and money) down the line.
Final Thoughts
Inheriting property in Australia does indeed provide opportunity, but let’s be honest - there are some tax headaches involved.
With proper planning - by employing CGT exemptions, creating a family trust, or donating charitably in a strategic way - you actually can optimize your inheritance and keep more of what’s yours.
Need help navigating the details? Don’t stress. Reach out to us and our specialists will guide you through the process.
Disclaimer
This article does not constitute financial advice and is for general information only. It does not take into account any individual’s personal objectives, situation or needs, and is not intended as professional advice. Any similarity to an individual’s personal circumstances and the examples provided in this article is purely coincidental. Any person acting upon such information without receiving specific advice, does so entirely at their own risk.
Authorisation under an Australian Financial Services Licence (AFSL) is not required in the provision of this article and the author plus Future Accounting Group Pty Ltd is not acting in its capacity as an Australian Financial Services Licence holder
Liability limited by a scheme approved under professional standards legislation.
