Your money with Noel Whittaker
Q MY parents bought a townhouse in Sydney in 1986, brand new, strata title. Dad passed away in 1989 and Mum in October 2015. I lived there with her from 2006 and continue to live there as I inherited the property. I would like to sell this year and believe you have to sell within two years of the date of death to avoid capital gains tax. Would the fact that I had been living there for nine or more years before she died make any difference to this?
A THE property should have passed to you free of capital gains tax as it was your parents’ residence. As you are living in the property, it will maintain its tax-free status as your main residence – the two year rule does not apply in this case. The fact that you were living in the property before your mother died is not relevant.
Q I AM in my 70s. My late husband and I bought into a retirement village in 2014, paying $170,000 each. After six years the residual value of our unit would be $119,000 each. My husband passed away last year. As his family are unhappy with his will I have offered to pay $119,000 to his children, which will entail a deed of family arrangement to change the will.
I understand I am not obliged to do anything. I am not eligible for any government pension. Centrelink’s gifting rules are a maximum $30,000 in five years. Centrelink advised that gifting is only not counted as an asset when a will is challenged and a court order made. I was advised that if I did apply for any pension the gifting amount would only come against me for five years, however I am still concerned it could be counted against me for 20 years.
A TO determine whether the $119,000 would be considered as a gift, the department would need to know more details from you about the instructions in your partner’s will and whether the payment is being made as a result of a court ordered change to the will.
If the payment was considered to be a gift, the amount by which it exceeds the allowable gifting amount is assessed for five years from the date it is given away. The gifting free area is $10,000 per financial year, limited to $30,000 per five financial years. Under general gifting provisions, if you gifted $119,000, $109,000 would be assessed as a deemed asset for five years from the date gifted.
- If you have a question for Noel, send to Q&A, PO Box 130, Wyong NSW 2259 or email edit@thesenior.com.au A selection of questions will be covered in this column. Personal replies are not given.
