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CGT on property in deceased estates

If you are appointed as an executor in a will, your responsibilities commence following the death of the will-maker. It is important for executors to consider the capital gains tax implications of a deceased estate when it is time to administer the estate property for its beneficiaries.

There is generally no CGT payable for the transfer of an asset from the deceased’s name to a beneficiary or the executor. However, the asset will become liable for CGT when it is sold by the beneficiary or an executor.

If the property was the deceased’s main residence, then the estate will have an exemption from paying CGT if it is sold within two years from the date of death. Spouses or beneficiaries can generally claim the main residence exemption when the deceased’s property becomes their main residence or when the property was purchased before tax on capital gains came into effect (on 20 September 1985).

If it is the beneficiary’s or executor’s intention not to sell the property within two years of the date of death, then they should obtain a valuation from a registered valuer. This will be used to calculate the capital gains payable when the property is eventually sold.

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