What is Inheritance Tax? Who pays and How Much?
Inheritance Tax refers to the range of taxes that may be payable by a person who receives a benefit under a Will (referred to as a ‘beneficiary’).
In the past Inheritance Tax usually referred to the payment of ‘death duties’ however this payment has now been abolished in Australia. In its place is a variety of taxes that may be payable by a beneficiary depending on the type of gift received under the Will and the way in which the gift is given to the beneficiary. One common type of tax that may apply to an inheritance is Capital Gains Tax which is a tax paid on the capital gain in the sale of an asset. One of the most common examples of Capital Gains Tax occurs when you inherit a house of the deceased under their Will. How you deal with the property will determine whether you will be liable to pay Capital Gains Tax if the property is sold. For instance, if you sell the property within two years of the death of the deceased then you will not be liable to pay Capital Gains Tax. You will also not be liable to pay Capital Gains Tax on the sale of the property if the property remained the main residence after the deceased’s death of the spouse of the deceased or a person with a life estate in the property.
The question of who pays Inheritance Tax rests on the construction of the Will of the deceased. Inheritance Tax implications are an important consideration for a person making their Will and a fundamental part of the legal area of Estate Planning. If the deceased received expert legal advice in respect of the tax implications in their Will a beneficiary will benefit doubly under the Will in that they have received an asset and an asset on which the impact of Inheritance Tax has been minimised as much as possible.
If you are a beneficiary under a Will you need to make sure that you are aware of all the taxation implications in your inheritance. By receiving expert legal advice at an early stage you will be able to minimise any Inheritance Tax that may be payable for example, by ensuring that you sell the residence within two years of the date of death of the deceased to ensure you receive a Capital Gains Tax exemption.
If you have received an Inheritance under a Will it is in your best interests to obtain legal advice on how to deal with that Inheritance so as to minimise incurring Inheritance Tax. The expert Probate and Will legal team at Heckenberg Lawyers have the information and advice you are looking for.
If you would like further information on Wills, Estates and Probate Law or need a qualified Wills, Estates and Probate Lawyer that can help you please call Heckenberg Lawyers today on 02 9221 2779 or email Graeme Heckenberg the expert Lawyer on all matters relating to Wills, Estates and Probate Law on: firstname.lastname@example.org
Offices are conveniently located in Sydney city close to all transport links.