Check if you can extend the 2-year limit on the CGT main residence exemption for an inherited property.
When the exemption applies
An inherited property is exempt from CGT if you dispose of it within 2 years of the deceased's death, and either:
- the deceased acquired the property before September 1985
- at the time of death, the property was the main residence of the deceased and was not being used to produce income.
Extending the 2-year limit
The 2-year limit is extended if disposal of the property is delayed by exceptional circumstances outside your control.
PCG 2019/5 The Commissioner’s discretion to extend the 2-year period to dispose of dwelling acquired from a deceased estate provides a practical administration approach to assist you in complying with relevant tax laws.
You do not have to apply for the extension. It is automatically granted if you satisfy all of the following 5 conditions:
- during the first 2 years after the deceased's death, more than 12 months was spent addressing one of the following circumstances
- the ownership of the property or the will is challenged
- a life interest or other equitable interest given in the will delays the disposal of the property
- the complexity of the deceased estate delays completion of its administration
- settlement of the contract of sale of the property is delayed or falls through for reasons outside your control
- restrictions on real estate activities imposed by a government authority in response to COVID-19
- the property was listed for sale as soon as practically possible after none of the circumstances above were an impediment, and the sale was actively managed to completion
- the sale was completed (settled) within 12 months of the property being listed for sale
- none of the following materially contributed to the delay in your sale
- waiting for the property market to pick up before selling the property
- delay due to refurbishment of the property to improve the sale price
- inconvenience on the part of the trustee or beneficiary to organise the sale
- unexplained periods of inactivity by the executor in attending to the administration of the estate
- the required extension is no more than 18 months.
You do not need an extension if either:
- the main residence exemption applies because an eligible person uses the property as their main residence from the date of death until the property is sold
- there is no CGT or there is a capital loss.
If you do not meet the conditions
If you do not dispose of the property within 2 years and do not satisfy all the conditions for an automatic extension, you can request an extension.
When you request your extension, make sure you include the following dwelling specific supporting information.
You can apply to us for an extension if:
- the property has sold and settled (in rare circumstances we’ll exercise our discretion prior to property being sold, where clarity is needed to resolve a matter)
- you are uncertain whether you meet the requirements to obtain an exemption
- you do not satisfy all the conditions for an automatic extension but you believe an extension should be allowed.
We will only grant an extension if there are exceptional circumstances outside your control.
Check if you can extend the 2-year limit on the CGT main residence exemption for an inherited property.