Inheriting a property and tax

[James Bond]

Hi, I will be inheriting a property which is tenanted and I will keep it as an IP.

At what point does it become a taxable asset - at the point of death or after probate and subsequent transfer into my name?

Thanks for any advice.

JB

 

[Terry_w]

Hi, I will be inheriting a property which is tenanted and I will keep it as an IP.

At what point does it become a taxable asset - at the point of death or after probate and subsequent transfer into my name?

Thanks for any advice.

JB

Was subjec to tax for the testator and you will be subject to tax if sold after the death. You inherit the cost base of the deceased.

 

[Rob G.]

At what point does it become a taxable asset ?

Assuming:

1) A post-CGT asset of the deceased; and

2) Not wholly used (or deemed) as an exempt main residence by the deceased at time of death


It already is a 'taxable asset'.

You will inherit the deceased's cost base and reduced cost base.

Therefore you will inherit a dwelling with an unrealised capital gain and at least some of that does not qualify as the main residence exemption.

Who says that Australia does not have death duties ?

 

[James Bond]

Well it gets more complicated as the residence was in the UK and was my father's PPOR, however it was tenanted for the last 9 months of his life as he was in a nursing home.

He passed away in the last tax year, however probate has just been granted and I have not as yet seen any income from the property.

I presume therefore once I receive the income (and the associated costs such as PM fee etc) that they will all form part of my 2014 - 15 return, as I have already done my 2013-14 return and did not count this property in my return as I had no tangible revenue or cost from it in 2013-14.

Am I correct?

Thanks

JB

 

[Rob G.]

was my father's PPOR, however it was tenanted for the last 9 months of his life as he was in a nursing home.

He passed away in the last tax year, however probate has just been granted and I have not as yet seen any income from the property.

The house could be deemed to be your dad's main residence where absent and tenanted under s.118-145.

You need to discuss the CGT and income tax position with an estate planner who specialises in tax and also international issues.

 

[alexlee]

Does the PPOR exemption apply to overseas property?

 

[James Bond]

The house could be deemed to be your dad's main residence where absent and tenanted under s.118-145.

You need to discuss the CGT and income tax position with an estate planner who specialises in tax and also international issues.

Would there be an international aspect - I presume there's no CGT as I'm not selling anything and I'm guessing the income will be taxed as part of my Australian income as I'm 100% Australian tax resident and don't pay tax elsewhere. And if I do pay tax in the UK it will be credited against my Australian tax due to the dual-tax agreement.

Hope I am right.....

JB

 

[Terry_w]

Does the PPOR exemption apply to overseas property?

Yes. it can

 

[Terry_w]

Would there be an international aspect - I presume there's no CGT as I'm not selling anything and I'm guessing the income will be taxed as part of my Australian income as I'm 100% Australian tax resident and don't pay tax elsewhere. And if I do pay tax in the UK it will be credited against my Australian tax due to the dual-tax agreement.

Hope I am right.....

JB

If it is exempt here from tax doesn't necessarily mean it will be exempt from tax in the UK.

 

[alexlee]

Also, doesn't the UK have an inheritance tax?

 

[Terry_w]

Also, doesn't the UK have an inheritance tax?

Yes it does.

 

[James Bond]

Also, doesn't the UK have an inheritance tax?

Yes but I am well under the threshold.

JB

 

[Paul@PFI]

The correct tax position is to:

1. Determine tax laws applicable to the country of source (UK); and
2. Determine tax laws applicable to the country of the deceased; and
3. Determine which tax laws prevail and exchange rates / timing; and
4. How Australian tax law applies to the inheritance eg cost base;