Dad’s home sale brings tax queries

Along with his late father’s home offered, Ashton must know in regards to the capital positive factors implications of the sale. Chartered accountant GAIL FREEMAN has the solutions…

4 years after his loss of life, Ashton has offered his father’s home.

“I used to be advised that, because it was his most important residence, I gained’t should pay capital positive factors tax (CGT) however that doesn’t appear proper,” Ashton stated when he got here to see me about it.

I advised him my recollection was that his father had lived out of city. 

“Is that right? Your reply may effectively influence my recommendation significantly if the world of the land was larger than two hectares,” I stated.

Ashton advised me his father had a bush block the place the land couldn’t be used for something viable. He introduced the plans exhibiting the world of the land was 5 hectares and it had been purchased on February 14, 1998.

Gail Freeman.

“Properly, Ashton, that raises two points for me in relation to CGT,” I stated.

“Firstly, the residence and as much as two hectares surrounding it, if used for personal functions, type your father’s most important residence and may be exempt from CGT. It clearly is exempt from CGT as much as the date of your father’s loss of life.

“After that we’ve got to take a look at the Australian Taxation Workplace’s main-residence rulings. If the home is offered inside two years of the date of loss of life and the property was used as his most important residence and was not used to supply earnings then the capital acquire is disregarded on that portion of the sale. 

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“There’s a additional provision that extends the two-year restrict with sure circumstances. Offered that within the first two years after the date of pop’s loss of life greater than 12 months is spent addressing one of many following:

  • A problem to both the need or the property possession. 
  • A provision within the will that delays disposal.
  • The property is complicated, which delays administration.

“As well as, the residence should have been listed on the market as quickly as practicable after decision of the above, the sale was accomplished inside 12 months and the delay was not brought on by ready for the property market to enhance to get a greater value, renovating the property to enhance the sale value, or the delay was brought on by inactivity on the a part of the executors and the required extension is not more than 18 months. “Clearly that doesn’t apply right here, so that you want a valuation ready by an expert valuer as outlined. Subsequently, below your circumstances, there can be a capital acquire on the primary residence two hectares from the date of loss of life to the date of sale.”

Ashton stated it was simply as effectively he checked.

“There’s additionally a second capital acquire on the remainder of the land from the date of buy to the date of sale,” I advised him.

“Because the land has little intrinsic worth and, based mostly on my expertise, the primary worth on this property lies with the primary residence. There must be a further valuation on the date of buy to find out the share of the acquisition value that pertains to the land. This share can be utilized to the sale value to find out the promoting value. 

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“There may be holding prices that may be offset towards the capital acquire. Nonetheless, I’ll assessment these when I’ve all of the paperwork obtainable.”

Ashton stated all of it sounded extra complicated than he’d imagined, however that “the ultimate determine will most likely be lower than I assumed”.

In case you want help with capital positive factors tax or every other tax associated matter contact the pleasant staff at Gail Freeman & Co on 6295 2844, e-mail [email protected] or go to

This column incorporates basic recommendation, please don’t depend on it. In case you require particular recommendation on this matter please contact Gail Freeman or your skilled adviser.

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Ian Meikle, editor