If you are leaving property to your family, or expecting to inherit some, the first question is usually whether the estate will be taxed. In Australia it will not be, in the way many people fear. The tax comes later, and it depends on what you receive and what you do with it next.
No tax on the inheritance itself
The ATO puts it plainly: there are no inheritance taxes in Australia. Federal estate duty does not apply to anyone who died on or after 1 July 1979.
Capital gains tax follows the property
A death does not, by itself, trigger capital gains tax. The person who inherits is treated as acquiring the asset on the day of death, and any gain the executor makes in passing it to them is disregarded. The tax waits until the beneficiary sells.
What the beneficiary is taxed on depends on when the deceased bought the asset. For an asset bought on or after 20 September 1985, the beneficiary takes over the deceased’s cost base. For one bought before that date, the cost base is its market value on the day of death.
The gain is not wiped at death if the asset passes to a charity or other exempt body, a super fund, or (in some cases) a foreign resident.
Assets bought before 20 September 1985 change from 1 July 2027. From that date they are subject to capital gains tax on gains that accrue from 1 July 2027.
The family home
If the home was the deceased’s main residence just before death and was not earning income, the beneficiary’s cost base is its market value on the day of death.
A sale of the inherited home can be free of capital gains tax altogether. If the deceased bought it on or after 20 September 1985, it must have been their main residence just before death and not earning income then; if they bought it before that date, there is no such use test. Either way, the beneficiary’s ownership must end within two years of the death, or within a longer period the Commissioner allows, unless from the death until the sale the home was the main residence of the deceased’s spouse (not one living permanently apart), of someone the will lets live there, or of the beneficiary who sells it. The ATO reads this as the sale settling within those two years.
If the deceased had lived overseas for more than six years in a row before dying, the exemption for their ownership period is lost.
The 2027 reforms leave this alone. The ATO says there are no changes to the main residence exemption.
Selling an inherited asset from 1 July 2027
For an inherited asset the deceased bought on or after 20 September 1985, the clock for the 50% discount runs from when the deceased bought it, not from the death. For a sale from 1 July 2027, the 50% discount applies only to the gain up to that date; the gain after it is indexed and may face a 30% minimum tax.
The new minimum tax has no special exclusion for inherited property. An inherited property’s gain counts unless another rule removes it, such as the main residence exemption above.
Stamp duty when property passes under a will
When the executor transfers property to a beneficiary under the will, each state treats it its own way:
- New South Wales. A duty of $100.
- Victoria. No duty, to the extent the transfer satisfies the beneficiary’s entitlement.
- Queensland. No duty, to the extent the transfer gives effect to a distribution in the estate.
- Western Australia. Nominal duty where there is no consideration; RevenueWA gives the figure as $20.
- South Australia. Not treated as a voluntary disposition, as long as it is not a transfer under a sale.
- Tasmania. A duty of $50, and no duty on an executor’s assent.
- Australian Capital Territory. No duty.
- Northern Territory. Exempt when made by the executor or administrator to a beneficiary under the will or the rules of intestacy.
Super paid to adult children
Super paid to an adult child can be taxed. An adult child who was not financially dependent pays tax of up to 15% on the taxed part of the taxable component (up to 30% on any untaxed part), plus the Medicare levy. The tax-free part is free.
The 17% and 32% you may see on a payment are the rates the fund withholds, not the final tax.
What is law, and what is not
- Law now. No inheritance or estate tax. Capital gains tax follows the asset, as above.
- Enacted, from 1 July 2027. The Division 119 minimum tax, indexation in place of the 50% discount, and capital gains tax on pre-1985 assets, each for gains accruing from that date. Main residence rules unchanged.
- Not law. No bill or announcement for an inheritance or estate tax was found as at 25 October 2026.
What you leave, or what comes to you, is easier to plan for when you can see what each asset would mean for your family. To start, book a first conversation; your solicitor and accountant handle the will and the tax. It costs nothing.
Nicholas Lockhart
Tax and duty law can change, and each family’s position differs; a solicitor and an accountant can confirm what applies to yours.
Source: ATO, QC49236 (16 September 2026); ATO, Capital gains tax reform (13 October 2026); ATO, Schedule 12 (17 June 2026); Income Tax Assessment Act 1997, Divisions 104, 115, 118, 119, 128 and 302; Treasury Laws Amendment (Tax Reform No. 1) Act 2026; Estate Duty Act 1914 and Estate Duty Amendment Act 1978; the duties Acts of each state and territory.