If you are thinking of doing a Will, or you are the executor of
a deceased estate, it is important to consider what taxes and
duties may be payable by the estate or the beneficiaries when the
time comes for an executor to deal with the estate property
following the death of the Will-maker.
While we cannot give specific advice in relation to taxation
issues, we can provide the following general information relating
to taxes and deceased estates. This first blog deals with CGT.
CAPITAL GAINS TAX GENERALLY
It is important that Will-makers, and executors of an estate,
understand the Capital Gains Tax ("CGT") implications of
the estate. Some assets in an estate that may be assessable for CGT
are real property, shares, collectables, antiques, jewellery and,
in some circumstances, items of personal use.
For the purposes of CGT, death does not constitute a disposal.
Therefore, there is generally no CGT payable on the transfer of the
asset from the deceased's name to the executor or to a
beneficiary. However, the asset may become assessable for CGT when
the asset is sold by the executor or the beneficiary.
CAPITAL GAINS TAX ON REAL ESTATE
If the real property was the deceased's principal place of
residence, the estate will have an exemption from paying capital
gains tax, if the property is sold within two years from the date
There are additional exemptions available in circumstances where
spouses or beneficiaries live in the deceased's property as
their own principal place of residence or when the property was
purchased before 20/9/1985.
If it is not the executor's or the beneficiary's
intention to sell the property within two years from the date of
death of the deceased, a valuation should be obtained from a
registered valuer. This will provide proper valuation evidence of
the property at the date of death and facilitate the calculation of
capital gains tax payable when the property is eventually sold.
Any person preparing a will, and any executor of a deceased
estate, should take careful advice about the tax implications of
the will so that they can manage the risk of unnecessarily
incurring a capital gains tax liability.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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There are several requirements that must be completed by an executor before the distribution of assets to beneficiaries.
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