What is a deceased estate? Is there land tax on a deceased estate?

Simply put, a deceased estate is the property of a person who has died. It includes any homes or buildings, investments, motor vehicles, cash, personal property etc. It’s everything they owned in their own name, but not normally superannuation or joint property.

Although there is, strictly speaking, no longer any death tax or death duty in Australia, other taxes can still affect your assets after you die.

Capital Gains Tax (CGT) usually has the biggest impact on deceased estates. Capital Gains Tax is a form of income tax payable when an asset that has gained value is dealt with. Limiting or adjusting for the impacts of CGT and other taxes is important to consider when making a Will. Legal and accounting advice is recommended, because if the tax issues are forgotten or ignored then you or your beneficiaries could find yourselves faced with a nasty surprise.

For simple estates CGT may not be payable to begin with, but later on your children or other beneficiaries may need to pay tax if they sell gifts left to them in the Will. Additional CGT may become payable in the future by the executor or administrator of a deceased estate if the estate is not simple or it takes a while to administer. There are some exemptions and concessions, such as for principal residences (the place where the deceased person actually lived), but there are conditions and limitations on their availability.

Income tax laws will also continue to apply. For example, tax on rental or interest income from the assets of the deceased estate may still be taxed. What we increasingly see are deceased estates having to pay additional tax on monies paid out by superannuation funds because the Will or the executor has not dealt with those monies properly.

As you can see there are a lot of things to consider regarding tax on a deceased estate.  It’s important to get professional legal advice and assistance when preparing your Will and other documents related to your estate planning.  Visit the Andersons Estate Planning site for more information or to arrange a consultation.