The capital gains tax (CGT) main residence exemption rules when you sell a dwelling you inherited.
Real estate and main residence needs to be read with this flowchart.
1. Did the deceased person acquire the dwelling before 20 September 1985?
Yes |
Read question 2 |
No |
Read question 3 |
2. Did settlement of your contract to sell the dwelling happen within two years of the person dying?
Yes |
Read answer 1 |
No |
Read question 5 |
3. Was the dwelling the deceased person's main residence just before they died?
Yes |
Read question 4 |
No |
Read answer 2 |
4. Just before they died, was the dwelling being used to produce income
Yes |
Read answer 2 |
No |
Read question 2 |
5. From the deceased person's death until settlement of your contract to sell the inherited dwelling, was it your main residence (or the main residence of an individual who had a right to occupy it under the will or the spouse of the deceased person)?
Yes |
Read question 6 |
No |
Read answer 2 |
6. From the deceased person's death until settlement of your contract to sell the inherited dwelling, was any part of the dwelling used to produce income?
Answer 1
Dwelling is fully exempt
Answer 2
Dwelling is not fully exempt
(but you may qualify for a part exemption)
- Dwellings that passed to you before 21 August 1996
This flowchart does not apply to a dwelling that passed to you before 21 August 1996. Real estate and main residence sets out the rules that apply in that situation.
- Where the deceased person died before 20 September 1985
If the deceased person died before 20 September 1985, the dwelling is fully exempt when you sell it. However, if you made a major capital improvement to the dwelling on or after 20 September 1985 and have used it to produce assessable income it may be subject to CGT (see Real estate and main residence).