Q: I am about to inherit a house worth about $380,000, as well as $100,00 in cash. What will be the tax implications of this and can tax be minimised? I am retired and have $500,000 in superannuation that I live off at the moment.
A: If the house is an investment property, you will take over the capital gains tax liability of the deceased. For example, if they bought it for $300,000 five years ago, you would be deemed to have acquired it for $300,000.
But if the property you inherit is somebody’s principal residence, it will be free of capital gains tax, and you will be deemed to have acquired it at market value at the date of death of the deceased. This is why it’s important to take advice from your accountant before selling the property.
There is no specific tax implications for the cash element of the estate, except the earnings could be subject to income tax and eventually capital gains tax if invested in growth assets and those assets are sold. If you are under 65, you could think about putting the money to superannuation.
Just keep in mind that there are many tax concessions for retirees and it could well be able to be held in your own name without any tax implications.
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