I have a rented property which would attract huge cgt if I sold. I intend to leave it to my kids. If I leave it in my will to be sold and the money divided between them, would that attract cgt? Would I be best to leave it to them and then they sell it after a period and divide the money
leaving property to kids
- Thread starter fernfurn
- Start date
the liability to pay cgt will arise when you die and your kids sell the property. If they hold on to it then there is no requirement to pay (it becomes their problem).
Until they sell it to split the profits, then they have to pay it.
When gains are realised, taxes must be paid. Pretty simple.
It adds up perfectly. CG is $900k no matter how you look at it.
As a resident there's a 50% discount applied if owned for > 12 months. Then they will pay at their marginal rate of tax eg 42% - so they might have to pay about $200k and have $800 k in their hands. You can't pass on the mortgage to the kids, this debt has to be paid by your estate.
nothing sucky about it.
As a resident there's a 50% discount applied if owned for > 12 months. Then they will pay at their marginal rate of tax eg 42% - so they might have to pay about $200k and have $800 k in their hands. You can't pass on the mortgage to the kids, this debt has to be paid by your estate.
nothing sucky about it.
This would depend on the situation.
If one of your kids has a large capital loss it may be better for them to inherit and then sell.
If your estate has other assets with capital losses it may be better for the property to be sold by the estate and the other asset with the loss to be sold so they offset each other - but this in turn depends on the beneficiary of the other asset too.
Leaving via a testamentary trust may make things more flexible. Maybe have the option for the estate to sell it in the will as well. Cover all bases.
Don't forget about any loans secured by the property either.
oh.. that is what stops me from giving that property to my neighbour
So if all my IPs have mortgage (and no more assets) then some of those IPs need to be sold to pay of the dept?
oh.. that is what stops me from giving that property to my neighbour
So if all my IPs have mortgage (and no more assets) then some of those IPs need to be sold to pay of the dept?
No. The beneficiaries of the property could qualify and keep the mortgage going.
Under the conveyancing act any loan secured by that property goes with the property unless you have specified otherwise. So if you had a large sum of cash laying around that could be used to pay a loan, for example - might even be life insurance proceeds.
You should also becareful of property A being used to secure a loan for property B. If you give X property A X would take it subject to the loan for property B.
Debt doesn't effect the amount of CGT payable.
CGT treatment depends on your date of purchase. If it is a pre September 1985 asset there is no CGT on your death. If the kids kept the property there will be CGT to pay when they sell but the CGT cost value will be based on the value of the property on your death.
If it is a post September 1985 asset, the CGT cost value is based on the acquisition price plus related expenses.
SYD
If it is a post September 1985 asset, the CGT cost value is based on the acquisition price plus related expenses.
SYD
