Capital Gains Tax on Transferred Assets

Capital Gains Tax on Transferred Assets (CGT)

If you as executor arranged to sell an estate asset during the administration of the estate and that asset sale creates a Capital Gains Tax liability, then it will be assessed in the estate’s tax returns and the liability paid out of estate money.

If on the other hand estate assets are transferred to beneficiaries, then any accrued Capital Gains Tax will remain with the asset so that when the beneficiary eventually disposes of the asset the Capital Gains Tax will be calculated from a particular date.

There are certain exemptions from Capital Gains Tax such as:

  • the deceased principal place of residence; and

  • any assets they acquired prior to 20 September 1985.

If these assets are sold by the estate, then there is no Capital Gains Tax liability from those particular sales. If those assets are transferred to beneficiaries as part of their entitlements, then Capital Gains Tax generally starts accruing from the date of the grant of probate (or otherwise the date on which the beneficiary had a present entitlement to take a transfer of the asset). For all other assets transferred to beneficiaries any Capital Gains Tax liability created when the beneficiary disposes of them is calculated from the date the deceased acquired them.

Obviously, this is an area in which you as executor, and the beneficiaries, are strongly advised to obtain independent taxation advice from professional accountants and/or financial planners.