Have you inherited a house recently? ATO have outlined new Safe Harbour rules to enable beneficiaries and executors to apply an exemption automatically.

There are some special rules contained within the main residence exemption provisions that can provide a full exemption if certain conditions are met.

If the conditions are not met, then the beneficiary might face a nasty capital gains tax (CGT) bill for their good fortune.

How to qualify for CGT main residence exemption

  • Property must have been principal place of residence prior to death
  • The inherited property should be sold within two years of the date of death

The Commissioner has the discretion to extend this period in some situations and has released safe harbour rules, including:

  • Property must be sold within three years of the date of death, and
  • Any delay in selling the property is because of factors beyond control of the beneficiary / executor

Such delays include:

  • A challenge to the Will
  • Where the complexity of the estate delays the completion of the administration process.

If you are unsure whether the main residence CGT exemption can be applied to an estate you are a beneficiary or executor of, please give us a call.