Clock ticking on claiming CGT exemption
It is correct if the property was covered with his main-residence exemption at date of death or if he bought it before September 20, 1985. If you don't sell it within two years from his death, you will be liable for capital gains tax on any increase in value in the property from the date of his death, after deducting selling costs and any holding costs not otherwise claimed as a tax deduction during that period. Of course, if it has been covered by your own main-residence exemption since he died, then CGT will not apply to any gain since he died.
Frequently Asked Questions about this Article…
Yes — but only in the specific situations described. You generally have two years to sell an inherited property without triggering CGT if the property was covered by the deceased’s main-residence exemption at the date of death or if the deceased bought the property before 20 September 1985. If you don’t sell within two years, CGT can apply.
You’ll be liable for CGT if you don’t sell within the two-year period (where that two-year rule applies). The tax is calculated on any increase in the property’s value from the date of the deceased’s death, after deducting allowable selling costs and any holding costs that haven’t already been claimed as a tax deduction.
The gain is measured from the date of the deceased’s death to the date you sell the property. CGT applies to any increase in value over that period, subject to deductions for selling costs and holding costs not otherwise claimed.
You can deduct selling costs (for example, agent fees and marketing) and holding costs incurred while you owned the property — but only those holding costs that were not already claimed as a tax deduction during that period.
Yes — if you have used the inherited property as your own main residence since the date of death and it’s covered by your main-residence exemption, CGT will not apply to any gain accrued since the deceased died.
A property purchased before 20 September 1985 is treated differently for CGT purposes. According to the article, that pre-1985 purchase status is one of the conditions under which the two-year selling period applies. (The article does not provide further detail beyond this point.)
No. When calculating CGT you can only deduct holding costs that were not otherwise claimed as a tax deduction during the ownership period. If you’ve already claimed those costs, they aren’t available to reduce the CGT calculation.
Not always. The two-year rule described applies only if the property was covered by the deceased’s main-residence exemption at death or if it was bought before 20 September 1985. Also, if you’ve lived in the property and it has become your main residence since the death, the main-residence exemption may prevent CGT on gains since the date of death.
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