Persona · Last reviewed 2026-05-01
Inherited property: keep it or sell it.
Cost-base step-up at death, 2-year main-residence window, CGT rules different from purchased property.
Property inherited from a deceased estate has special CGT treatment under ITAA 1997 Div 128. The cost base is reset at the deceased's death-day market value (if the property was their main residence) or carries through at the deceased's original cost base plus post-acquisition improvements (if it was an investment or post-1985 second home).
The 2-year window: if you sell within 2 years of the deceased's death, the property's main-residence status is preserved and the sale is fully CGT-exempt (provided it was the deceased's main residence). After 2 years, partial CGT applies on a pro-rated basis. The exemption only covers the deceased's holding period.
Practical: the CGT cost-base step-up at death is one of the largest one-shot tax events most families encounter. A $400K-cost property worth $1.2M at death produces an $800K cost-base reset for the inheritor. Selling within 2 years locks in zero CGT; holding longer can still be tax-favourable but needs CGT projection.
Typical position
- Capacity
- Existing property inherited. No new purchase capacity needed.
- Deposit
- n/a (equity inherited)
- Horizon
- 2-year window for full CGT exemption
Informational. Not financial advice. Your specific position depends on your full income / debt / dependants picture — run the calculators with your numbers.
Calculators that fit
- CGT calculator
Inherited cost base, 2-year window.
- Cashflow projector
Hold-vs-sell scenarios over 5-10 years.
Guides that go deeper
- Capital gains tax explained
Div 128 deceased-estate cost base treatment.
Terms in this persona
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- Off-the-plan buyer
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Open the playbook — 11 chapters end-to-end, every threshold cited.