Managing inherited assets often comes with important financial considerations. Beyond the paperwork, it’s vital to understand how capital gains tax (CGT) applies to what you’ve received. Having a clear picture early helps you make informed decisions that protect and grow your financial position.
Understanding capital gains tax on inherited assets
There’s no separate inheritance tax in Australia, but CGT may apply when you eventually sell or transfer an inherited asset such as property, shares, or investments. You essentially inherit the original owner’s cost base and tax history, which determines how much CGT you’ll pay if you sell.
Key points to keep in mind:
- Date of inheritance: If the asset was purchased before 20 September 1985 (when CGT began), you may not have to pay CGT unless it’s improved or used to earn income.
- Date of sale: If you hold the asset for more than 12 months before selling, you could qualify for a 50% CGT discount.
- How the asset was used: If the property was the deceased’s main home and not used to generate income, a full or partial exemption may apply.
Knowing how these factors work together can help you plan ahead and avoid unexpected tax outcomes when selling or transferring inherited assets.
What happens when you inherit property
Inheriting property can be a major financial event, and it’s important to know when CGT applies. The tax only takes effect when you sell or transfer ownership, not when you inherit.
CGT may apply if:
- The property wasn’t the deceased’s main home, or
- It’s rented out before sale, or
- It’s sold more than two years after the date of death (without an approved extension).
You may be eligible for an exemption if the property was the deceased’s main residence and sold within two years of inheritance. Getting advice early can help confirm what applies to your situation and ensure your decisions are tax-efficient.
Practical ways to manage CGT on inherited assets
While every case is different, these steps can help you manage your position effectively:
- Consider timing: Holding the asset for more than 12 months may entitle you to the 50% CGT discount.
- Keep records organised: Maintain copies of valuations, ownership details, and any income records.
- Seek professional advice early: CGT on inherited assets can be complex. The right guidance from the start can help you avoid costly mistakes.
At Knight, we aim to make financial guidance clear, practical, and accessible. Our role is to simplify complex matters so you can make confident decisions with clarity and purpose.
Why the right guidance makes a difference
Managing inherited assets is about more than compliance – it’s about protecting long-term financial outcomes. With the right strategy, you can maximise what you’ve been left with while staying aligned with your goals.
At Knight, we combine strong technical expertise with a down-to-earth approach. We work closely with individuals, families, and business owners to support smarter, more confident financial decisions. Our team brings the energy, passion, and insight needed to help you move forward with confidence.
Every step of the way
Navigating inheritance tax in Australia doesn’t have to be complicated. With expert support and a clear plan, you can manage your CGT obligations and protect your financial future.
If you’ve inherited assets and want to understand your CGT position, contact Knight today. We’ll help you make sense of the details and ensure your next steps are financially sound.