24th Mar 2017
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Q&A with Rod Cunich: what about Capital Gains Tax?
Author: Rod Cunich
Rod Cunich explains the intricacies of Capital Gains Tax

At the recent YourLifeChoices Retirement Bootcamp, legal expert Rod Cunich answered some tricky questions, such as how CGT affects an inheritance. 

For more than 33 years Rod Cunich has been helping clients plan for their future by finding practical solutions to legal matters. When it comes to succession planning, business, corporate and commercial law and practice, he is a leader in his field.

Rod is a good listener and takes the time to get to know his clients on a personal level, earn their trust and work with them to achieve positive outcomes of value. It is through careful planning that he is able to so effectively help clients attain a level of certainty and minimise worrying risks. He holds firm the value of pursing social justice close to his heart.

www.rodcunichlawyer.com

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Question: I’m a widow and have stepchildren and I also have no children myself so half of my estate will go to stepchildren and half to my own nieces, three nieces. What happens with Capital Gains Tax (CGT)? 

Answer: Okay, with Capital Gains Tax is the question? 

You’re leaving assets – part to step family and part to nieces and nephews. 

When you die, regardless of who you leave your assets to, your assets will pass from you, through your estate to your beneficiaries without any CGT being paid. 

However, if there’s Capital Gains Tax which has accrued on the asset, say it’s an investment property, they will inherit not only the property, but the CGT liability attached to the property. They won’t have to pay it at the time they receive it – only when they sell it. The one exception to that is when one of the beneficiaries lives overseas, because a gift to an overseas resident will be a deemed Capital Gains Tax event and there will have to be CGT paid on that gift even though it hasn’t been sold.  

The information in this article and video should be considered general in nature and legal advice should be sought. Rod can be contacted via his site Rodcunichlawyer.com, where you can learn much more, and also buy a copy of his book. 

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    COMMENTS

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    Eddy
    31st Mar 2017
    10:50am
    I take from that answer that if/when I bequeath my house, which is my principal residence, to my children, they will not be liable to CGT if they choose to sell it.
    Budwah
    31st Mar 2017
    12:31pm
    Firstly I'm not an expert but my understanding is that the moment your children inherit your house no CGT is paid by them on the capital gain you have made on your house. When they receive the house your children can sell it and split the proceeds or a value should be placed or obtained for the house then in say 2 or 3 or more years if they decide to sell there is CGT payable on the difference of the inherited value and the selling price.
    So for example your house is worth $100,000.00 when your children inherit your house then they sell it for $150,000.00 they would have to pay CGT on $50,000.00.
    Julian
    31st Mar 2017
    1:39pm
    "...they will inherit not only the property, but the CGT liability attached to the property. They won’t have to pay it at the time they receive it – only when they sell it..." This means that all CGT is paid on the gain. Is acquisition price minus the purchase price, at the time of its purchase. Upon acquisition, through an estate, the recipient inherits the CGT from those who bequeathed it. The article states that if the recipients were to sell it immediately, then CGT is payable. This means that the recipient does not have to incur their own gain. CGT applies throughout.

    It pays to read it twice.
    Sundays
    31st Mar 2017
    2:32pm
    Yes read it twice. CGT is only payable on assets which attract capital gains. Investment properties, yes. Your, principal residence, no. Good explanation Budwah
    MICK
    31st Mar 2017
    6:50pm
    Capital gains tax has been a scam for decades. Investors used to have capital gains indexed against the CPI so that it could be determined if a genuine 'gain' was made or not. The government of the day decided that they could not get their greedy hands on enough of our money so they changed the system so that the casino (it) wins all the time. They allowed investors to pay tax on half the gain. A total rort!
    Here's the deal: you buy an investment property for $400,000. That is its value now. You sell it in 20 years for $1 million dollars. People say 'unfair'.
    The real issue is that your cost of living has doubled in 20 years and the buying power of your $400.000 dollars has halved. So the real gain is only $200,000 ($1 million -800,000).
    You should be paying tax on $200,000 but the government gives you a 50% discount on your phony gain of $600,000 and taxes you on $300,000. You get the point....they are taxing people on money they have not really made!
    The above does not even mention the issues in paying off the above property in the first place and people who think 'lucky them' fail to understand that the bed of roses they see is other than that.
    Who said making a quid was easy. Some seem to make money easily but uncle ATO is always there to get you at the end.....unless you make enough and can legally cheat your way out of paying a cent. Welcome to the world of multinationals and the greedy wealthy who have made an artform out of fraud.


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