Tax Obligations from Inherited Properties

As of 1979, beneficiaries do not need to pay tax from inherited money, property or assets. Yippee! However, there is a catch. You may not need to pay inheritance tax anymore, but this does not mean that you are exempt from tax obligations from the inherited assets.

Capital Gains Tax (CGT) is the tax on the increase in value from when a property was acquired to when it is sold. If you plan to sell an inherited property, you will have to pay CGT. Additionally, if you rent an inherited property and receive income from it, you will be taxed based on that income you make. 

Tax based on superannuation death benefits is a little more complicated. If you are tax dependent on the deceased, such as a spouse, child under 18 or someone who is financially dependent, then you are eligible to receive the benefit tax-free provided that you had declared your tax dependency beforehand. If you are not, then how much tax you will have to pay depends on how the benefit was paid to you. If it was paid on a lump sum instead of an income stream, then it will not be taxed. 

The ATO considers income from inherited dividends to be liable to tax obligations. However if the dividends are franked, meaning the company they belong to has already paid tax on some of them, then you may be liable to franking credits. 

Non-residents may face additional tax obligations when inheriting assets from an Australian estate, and will not be eligible for certain tax concessions offered to Australian residents. 

If you have any questions on whether you need to pay tax on inherited assets, please do not hesitate to contact me. I am here to help.

DISCLAIMER: This explanation is for informational purposes only and does not constitute legal advice.