Selling a deceased estate property – important tasks
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 in the Will needs to hire a lawyer and apply to the court for Probate, which verifies this Will. This can take around four to six 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 in the Will. The Executor is also responsible for hiring a real estate agent to make sure the sale of property 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. Again, it is best to seek a lawyer’s advice on how to go about this quickly and efficiently.
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 when 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.
Selling the property by auction is often the quickest way, although any method of sale can be used (request my blog article on the pros and cons of different methods of sale).?The real estate agent will follow the instructions of the Executor. The Executor has to take control of this process and:
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 if none of the other beneficiaries object. However, this is often inadvisable, as it can cause disputes between family members later on. Dispute and acrimony are two things you should try to avoid in managing a deceased estate wherever possible.
Do you pay Capital Gains Tax (CGT) 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.
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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 next 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 every aspect of 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, including details of lawyers and tax agents who specialise in this, please contact me. I am highly experienced in dealing with deceased estate sales and will be happy to help you.
Disclaimer: The above information does not constitute legal advice and readers are urged to seek independent legal and tax advice from a qualified practitioner.
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