People who find out that they are Inheriting An Investment Property have critical decisions to make. In this blog, we will study two options that Property Lawyers Sydney comes across quite often.
Property inheritance from the Best Lawyers in Sydney
To keep making optimum use of the estate as an investment before deciding to sell it or live in it is where any property owner gets a fix.
Each situation has its individual factors to consider, including taxation implications.
If you wish to get more data about taxation and property inheritance from the Best Property Lawyers in Sydney, you must contact the services of Platinum Lawyers. Now, let’s take a look at the two most popular inheritance scenarios.
Scenario one: You choose to continue using the property as an investment before selling.
Investment is always a good option. The scenario mentioned above is an excellent way to either grow a current investment property portfolio or move up a step on the property investing ladder. But it’s essential to learn about the tax implications.
Firstly, any rental revenue received from the estate will be taxable income for the new owner. Hence, tax deductions connected with the property, such as interest repayments, council rates, insurances, maintenance costs and property management charges, will also be deductible for the current owner.
To claim the prices associated with the property during the time of tax payment, the owners are expected to keep records of the costs. But how can they claim depreciation, which doesn’t require a financial expenditure?(You must seek a suitable Property Investment Advisor if you want an appropriate answer for it.)
Depreciation is the general wear and tear of assets and estates over time. Inheritors of income-producing properties can declare this depreciation as a tax deduction in each financial year. In order to do this, the owners need a tax depreciation program prepared by a specialist quantity assessor. The tax depreciation schedule is a report that outlines each depreciable component of the property, which an accountant utilises to determine the depreciation deduction.
The current owner should be well aware of the capital gains tax (CGT) implications at the time of the trade. Remunerating CGT when Inheriting An Investment Property is complicated and mainly depends on how the property was maintained and how long the new buyer held the property before selling it. These are the chief contributing factors of whether the estate will be fully or partially CGT exempt or you will have to pay the tax.
If the property was bought before 20 September 1985 (the date when CGT came into the picture) and the new proprietor sold it within two years, then the property is fully exempt from CGT.
It gets somewhat more complicated in the scenario when the property was purchased after this date.
If the estate was bought after 20 September 1985, and if the new proprietor acquired the investment property after 20 August 1996, then a total CGT exemption won’t be available. Nonetheless, they may be able to receive a partial exemption, and the individual’s accountant will evaluate this when the time arrives to calculate any CGT.
For more detailed information on tax exemption, you should talk to one of the experienced Property Lawyers in Sydney. Moving on…
Scenario two: Residing in the property before selling it
The primary thing to know in this situation is that the proprietor must honour the current fixed lease. This means the present resident can stay at the house until the lease period expires or all parties agree to an earlier date.
The new owner must remember that while the property is still leased, they can claim tax deductions even if they have completed a full financial year. Pro-rata reductions can be applied to any sort of tax deduction, including interest repayments and depreciation.
If the property is the new owner’s primary habitation before the sale, they will be partially CGT exempt. The only situation where a total CGT exemption would apply would be if the property was the previous owner’s primary residence and they never rented it out.
Best Advisor On Property Investment Sydney
So, these were the 2 principal scenarios where you can get tax exemption (full, partial, or none) depending on your case. If you’re in the process of Inheriting an Investment Property and want the best advice regarding the same from one of the trusted Property Investment Advisor, you must contact our services.
The Property lawyers at Platinum Lawyers Sydney services deal with anything that includes lands, estates, houses or buildings, whether you are seeking to buy or sell one. However, certain confusions are constantly arising regarding the relationship between Conveyancing Lawyers and Licensed Conveyancer. But several clients of ours ascertain that a Licensed Conveyancer is comparatively cheaper than a Conveyancing Lawyer, and so is a property advisor. Regardless, the inheritance of any property is a tricky subject, and our team will be pleased to assist you regarding the same.
For more information on making the best out of an inherited investment property you have just purchased and assistance in tax exemption, contact the services of Platinum Lawyers Sydney. Call (02) 8084 2764 or Request a Quote by filling the form provided on this page.