--- title: Inherited Homes and CGT - What the New ATO Guidance Means description: Learn how new ATO guidance on inherited homes may impact CGT and your estate. Understand key risks, planning tips, and how to protect your family’s wealth. image: https://trekkadvisory.com.au/hubfs/inherited-home-and-cgt-march-1.png --- [!["Trekk Advisory" logo: bold black "Trekk" in modern font with smaller red "ADVISORY" below on a white background.](https://trekkadvisory.com.au/hs-fs/hubfs/Logos/trekk-advisory-logo-black%201.png?width=150&height=75&name=trekk-advisory-logo-black%201.png "\"Trekk Advisory\" logo: bold black \"Trekk\" in modern font with smaller red \"ADVISORY\" below on a white background.")](https://trekkadvisory.com.au) - [Featured services](https://trekkadvisory.com.au/how-we-help) - [Business accounting](https://trekkadvisory.com.au/small-business-accountants) - [Clarity Bookkeeping](https://trekkadvisory.com.au/clarity-bookkeeping) - [Xero cloud accounting](https://trekkadvisory.com.au/xero-cloud-accounting) - [Advice + business advisory](https://trekkadvisory.com.au/business-advisory-services) - [Tax minimisation + planning](https://trekkadvisory.com.au/tax-minimisation-and-planning) - [Self-managed super funds](https://trekkadvisory.com.au/self-managed-super-funds) - [Business Valuations](https://trekkadvisory.com.au/business-valuations) - [How we help](https://trekkadvisory.com.au/how-we-help) - [Understand your numbers](https://trekkadvisory.com.au/how-we-help/understanding) - [Grow your numbers](https://trekkadvisory.com.au/how-we-help/growth) - [Leverage your numbers](https://trekkadvisory.com.au/how-we-help/leverage) - [Who we are](https://trekkadvisory.com.au/our-team) - [Resources](https://trekkadvisory.com.au/information-centre) - [Get in touch](https://trekkadvisory.com.au/contact) - QLD - [Brisbane](https://trekkadvisory.com.au/brisbane) - [Gympie](https://trekkadvisory.com.au/gympie) - [North Queensland](https://trekkadvisory.com.au/north-queensland) - [Rockhampton](https://trekkadvisory.com.au/rockhampton) - NSW - [Northern Rivers](https://trekkadvisory.com.au/northern-rivers) [Download: Success Checklist](https://trekkadvisory.com.au/business-success-checklist) ![](https://trekkadvisory.com.au/hubfs/inherited-home-and-cgt-march-1.png) March 18, 2026 By Troy Furness # Inherited Homes and CGT - What the New ATO Guidance Means ##### Share: - - - When a family home is passed on, it is often one of the most valuable assets in an estate. Alongside the emotional significance, there can also be substantial tax implications. Recent draft guidance from the ATO - TD 2026/D1 - has brought renewed focus to how inherited properties are treated for capital gains tax (CGT). While some commentary has labelled this a “death tax by stealth”, the reality is more nuanced. What this update does highlight is the importance of getting estate planning right - especially where property is involved. ### Why This Update Matters Under current rules, a deceased estate or beneficiary can sell a family home without triggering CGT. This exemption can be significant, particularly where a property has been held for many years and increased in value. To access a full exemption, one of the following conditions generally needs to be met: - The property is sold within two years of the date of death (subject to extensions in some cases), or - The property is treated as the main residence of a qualifying individual from the date of death until sale These qualifying individuals may include: - A surviving spouse - A beneficiary - Someone with a right to occupy the property under the will It is this last point that the ATO’s draft guidance focuses on. ### The Key Change - What Counts as a “Right to Occupy”? The ATO is taking a stricter view on what it means for someone to have a right to occupy a property under a will. According to the draft determination: - The right must be clearly and explicitly stated in the will - It must be granted to a specific, named individual - Informal arrangements or trustee discretion are not enough This has important implications for how estates are structured. For example: - If a will gives an executor general discretion to allow someone to live in the property, this may not qualify - If a testamentary trust allows a beneficiary to occupy the home, this may also fall outside the exemption In both cases, the property could lose access to the full CGT exemption on sale. ### Why This Creates Risk for Families For many families, the intention is simple - allow a loved one to remain in the home for a period of time. But under this draft view, the way that intention is documented matters. If the structure does not meet the ATO’s requirements, the outcome can be significant. Consider a property valued at $2 million with a capital gain of $1.5 million. Depending on the circumstances, this could result in hundreds of thousands of dollars in CGT. This is where estate planning moves beyond legal structure and becomes a financial strategy. ### It’s Not All or Nothing While the draft guidance tightens one area, it does not remove all opportunities for CGT relief. There are still pathways to: - Access a full exemption under the two-year rule - Apply partial exemptions where relevant - Use the CGT discount in certain cases The key is understanding how these rules apply before decisions are made - not after. This is particularly important where property, family intentions, and long-term wealth planning intersect. ![inherited-home-and-cgt-march-content](https://trekkadvisory.com.au/hs-fs/hubfs/inherited-home-and-cgt-march-content.png?width=300&height=300&name=inherited-home-and-cgt-march-content.png) ### Practical Steps to Protect Your Estate If you own property or expect to pass one on, there are some practical steps worth considering. #### 1. Review Your Will Carefully If you intend for someone to live in the property after your passing, ensure this right is clearly defined and documented in the will. Vague or discretionary wording may not achieve the intended outcome. #### 2. Consider Timing of Sale The two-year exemption window remains a key planning tool. If a property is likely to be sold, timing can have a direct impact on the tax outcome. Holding a property longer may make sense from a lifestyle or investment perspective, but it needs to be weighed against potential CGT exposure. #### 3. Understand the Structure If your estate plan involves more complex structures, such as testamentary trusts, it is important to understand how these interact with CGT rules. What works well for asset protection or income distribution may not always align with tax outcomes. #### 4. Get Advice Early Estate planning is one area where small details can have large consequences. Working with advisors who understand both the tax and strategic side of the equation can help you make informed decisions.  ### Looking at the Bigger Picture Estate planning is not just about passing on assets. It is about preserving value and avoiding unintended outcomes. Decisions around property, timing, and structure all play a role in shaping what the next generation receives. In many cases, these decisions are connected to wider financial considerations, including cash flow, investment strategy, and long-term goals. For families managing multiple assets or planning for retirement, this may also involve reviewing how property fits alongside superannuation structures such as a[self-managed super fund](https://trekkadvisory.com.au/self-managed-super-funds). ### The Bottom Line The ATO’s draft guidance is a reminder that estate planning needs to be deliberate and well-structured. Assumptions can be costly - especially when it comes to CGT on property. By reviewing your arrangements early, documenting intentions clearly, and understanding how the rules apply, you can help protect your family’s wealth and reduce the risk of unexpected tax outcomes. If you would like clarity on how these changes may affect your situation, or want to review your current structure, it is worth starting the conversation now. [Contact Trekk Advisory](https://trekkadvisory.com.au/contact) to explore your options and ensure your plans are aligned with both your intentions and the current rules. #### About Author [Troy Furness](https://trekkadvisory.com.au/information-centre/author/troy-furness) Troy is one of the Directors of Trekk and our self-appointed 'Chief Ideas Person'. He's a CPA with more than 30 years in public practice, private enterprise, across large firms, family businesses and his own practice. He has also sat on the other side of the desk. Troy was general manager of his family's business. He led the contract to feed Australian Defence troops in East Timor during the peacekeeping mission. He has been and still is an executive director of a number of businesses and is now a Non-Executive Director of a large charity. Today Troy works with business owners and Boards of businesses turning over $5M to $100M. His work covers virtual CFO services, forecasting and scenario planning, tax and structuring advice, board advisory and business valuations, including valuations for family law matters. He tells clients what they need to hear, not just what they want to hear, and he looks for the fairest outcome for everyone at the table. The best piece of advice he's been given is "Work hard and the rewards will come, if you give up, then so will the rewards." Outside work, you'll find Troy travelling to tick off the bucket list or out on his bush block. #### Related Posts [![](https://trekkadvisory.com.au/hubfs/Blog%20Images/new-ato-travel-and-meal-rates-sept-blog.png)](https://trekkadvisory.com.au/information-centre/new-ato-travel-and-meal-rates-what-you-can-actually-claim) September 24, 2026 #### [New ATO Travel and Meal Rates: What You...](https://trekkadvisory.com.au/information-centre/new-ato-travel-and-meal-rates-what-you-can-actually-claim) Each year, the ATO updates its reasonable travel and overtime meal allowance rates, and each year... 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