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Selling a deceased estate property – important tasks

Sep 25, 2020

Selling a deceased estate can be emotional and daunting, especially if you are inheriting property from your parents. It is a complicated process to have to deal with at an already difficult time. However, with the right help and support, you can get through it.

Here are some of the essential things you need to know about winding up an estate.

How is probate obtained?

If the deceased has left a will, the person named as the executor needs to apply to the court for probate, which verifies this will. This can take around four weeks to come through. Once the grant of probate has been received, the executor then has responsibility for the distribution of the estate to beneficiaries according to the deceased’s wishes. The executor is also responsible for hiring deceased estate lawyers and a real estate agent to make sure everything is done legally and transparently.

If the deceased did not leave a will, the process is a little more complicated, as a Letters of Administration document must be obtained from the court. This has to be done by a family member, and it takes longer than applying for probate.

Can you sell a house while in probate?

Nothing belonging to the deceased can be sold until probate is granted. However, there are often multiple beneficiaries of a will, such as if you are inheriting property with siblings, so it can make sense for the property to be sold as quickly as possible after probate is granted. This way everyone can receive their share quickly, leaving less room for disputes.

Often selling the property by auction is the quickest way. The executor has to take control of this process, and:

  • Get property appraisals from at least three real estate agents.
  • Choose one agent to work with on the sale of the house.
  • Keep all beneficiaries informed at every stage.
  • Ensure the asking price is in line with market value.
  • Distribute the proceeds from the sale to the beneficiaries in line with the will.

Can a beneficiary buy a house from the estate?

If there is a partial distribution of the estate and you are one of the beneficiaries, you can buy the house if you can afford it and none of the other beneficiaries object. However, this is often inadvisable, as it can cause disputes between family members. Dispute and acrimony are two things you need to avoid wherever possible.

Do you pay Capital Gains Tax on a deceased estate?

If you inherit property from a deceased estate and then decide to sell it within two years, you can usually avoid deceased estate Capital Gains Tax. Pre-CGT asset disposal makes sense if you want to get maximum value from your inheritance.

What is the deceased estate three-year rule?

If there are no immediate beneficiaries to the will, the executor is named as the trustee. For the first three years, the estate is taxed at individual income tax rates, with the full tax-free threshold applying, but tax offsets do not apply.

After three years, specific tax rates are applicable. Deceased estate tax rates can vary, so we recommend that you check the ATO website for more information.

Deceased estate tax return instructions

If you are a beneficiary of the will and CGT is applicable to anything you choose to sell after inheriting it, this needs to be included on your tax return.

If you are the executor of an estate that has been placed in trust, you will need to complete a trust tax return for the estate. This must include any CGT applicable to any trust assets that the executor has sold.

More information about selling a deceased estate

If you are selling property you have inherited, it is essential to get the right help to see you through this difficult process. The right real estate agent can make all the difference, helping you arrange the sale and advising you on how to present your property to achieve the highest possible sale price.

If you are in this position and would like more advice, please contact us. We are highly experienced in dealing with deceased estate sales, and will be happy to help you.

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