Is There Inheritance Tax in Australia? 2026-27 Guide
Short answer: no. Australia has no inheritance tax, no estate tax and no death duty. When someone dies and leaves you money, a house or shares, you do not pay tax simply for receiving it. But that is not the same as saying an inheritance is tax-free. Three parts of the tax system can still take a share: capital gains tax when you later sell an inherited asset, tax on superannuation death benefits paid to adult children, and income tax on anything the inherited assets earn after the death. This guide works through each one with real 2026-27 figures.
The short answer: no inheritance tax since 1979
Australia used to have death duties. Both the Commonwealth and the states levied them for most of the twentieth century. That system ended in the late 1970s. Queensland abolished its death duties first, in 1977, and the federal government abolished federal estate duty in 1979. By 1979 every Australian jurisdiction had followed, and no Australian government has levied a tax on the act of inheriting since.
The United Kingdom charges 40% inheritance tax on estates above £325,000, and the United States taxes very large estates at up to 40%. The confusion usually comes from migrants who assume Australian rules mirror the UK or US, and from the fact that the taxes that do apply after a death feel like an inheritance tax even though they are legally something else.
There is also no secret or pending “death tax”. The idea resurfaces in election campaigns every few years, usually as a scare story. Neither major party has proposed reintroducing an inheritance tax.
What you do pay: the four costs after a death
Receiving an inheritance is not a taxable event — but these four things can still cost you money.
1. Capital gains tax when you sell an inherited asset
CGT is not charged when you inherit — it is charged when you sell, and it is calculated using special rules that treat the date of death as the key date:
- The deceased’s main residence, sold within two years of the death: generally fully exempt from CGT — it does not matter whether you lived in it or rented it out during those two years. The clock runs from the date of death, and the contract of sale must be entered into within the two years.
- The deceased’s main residence, kept longer than two years: your cost base becomes the property’s market value at the date of death. Any growth after that date is your capital gain when you eventually sell.
- An investment property or shares bought after 20 September 1985: you inherit the deceased’s original cost base — what they paid, plus eligible purchase costs. The gain is measured from their purchase price, not from the value at death.
- An asset bought before 20 September 1985 (pre-CGT): your cost base is the market value at the date of death. The pre-CGT status itself does not transfer to you.
Hold the asset more than 12 months before selling and the 50% CGT discount generally applies — though the discount rules change for disposals after 1 July 2027 (see the reform section below). Our full guide to CGT on inherited property works through the cost-base rules and the discount, and you can model your own numbers with the CGT calculator.
The 2-year window can be extended. Under the ATO’s Practical Compliance Guideline PCG 2019/5, the period is extended automatically — you do not need to apply — if more than 12 months of the first two years was spent dealing with a challenged will, a life interest delaying disposal, or estate complexity, and the extension needed is no more than 18 months.
2. Superannuation death benefits tax — the 17% that surprises adult children
Superannuation does not form part of a deceased estate automatically. It is paid by the fund to the nominated beneficiaries, or to the estate if there is no valid nomination. Whether tax applies depends entirely on who receives it:
- Paid to a tax dependant — a spouse or de facto partner, a child under 18, someone financially dependent on the deceased, or someone in an interdependency relationship — the whole lump sum is tax-free, whatever its size.
- Paid to a non-dependant — in practice, a financially independent adult child — the tax-free component stays tax-free, but the taxable component is taxed. The “taxed element” is taxed at 15% plus the 2% Medicare levy, a total of 17%. Any “untaxed element” — typically from life insurance held inside super — is taxed at 30% plus the 2% Medicare levy, a total of 32%.
Note the trap: an adult child can receive a super death benefit under superannuation law but still be a non-dependant for tax. And the Medicare levy applies when the benefit is paid directly to the beneficiary, but not when it is paid via the estate — on a $320,000 taxable component, a $6,400 difference. For the full rules, see our guide to super death benefits tax, and model your own balance with the super calculator.
3. Probate and legal costs
Probate is the Supreme Court process that confirms the executor’s authority to administer the estate. It is not a tax, but a real cost families rarely budget for: the filing fee scales with the value of the estate, plus solicitor fees. For a straightforward estate the total is usually in the low thousands, paid from the estate before beneficiaries receive anything.
4. Transfer duty on inherited property
In Victoria, a transfer by the legal personal representative in accordance with the will or the intestacy rules is exempt from duty under section 42 of the Duties Act 2000 — nil duty. In New South Wales, property passing to a beneficiary under a will or the intestacy rules attracts only nominal duty, typically $50–$100, rather than duty on market value. On a $1,000,000 home, full NSW duty would be roughly $40,000.
The exemption applies only to the transfer from the estate to the beneficiary. If the beneficiary later transfers the property to someone else — a sibling buyout, for example — normal duty rules apply on market value. And do not confuse inheriting with gifting: if a parent gifts a house to an adult child while alive, duty is charged on the market value even though no money changes hands.
Worked examples: what an inheritance actually costs
Example 1 — Inherited house sold within two years: $0 CGT
Margaret bought her Sydney home in 2010 for $520,000 and lived in it until her death in October 2025, when it was valued at $1,150,000. Her daughter Sarah inherits it and sells it in June 2027 — 20 months after the death — for $1,180,000.
Because the house was Margaret’s main residence just before her death and the sale settles within two years of the death, the full main residence exemption applies. Sarah’s capital gain is $0 and she pays $0 CGT, even though the house gained $660,000 in value since Margaret bought it. Sarah also rented the house out for six months while probate was finalised. That does not break the exemption — the ATO’s own example confirms renting inside the two-year window is fine. The only costs Sarah pays are the estate’s probate and legal fees and the nominal transfer duty to put the title in her name.
Example 2 — The same house sold after two years: $30,350 in tax
Suppose instead that Sarah keeps the house, rents it out, and sells it in March 2029 for $1,320,000. The figures below use 2026-27 tax rates for illustration (2028-29 rates are not yet legislated):
- Cost base: $1,150,000 (market value at the date of death, because the house was Margaret’s main residence)
- Capital gain: $1,320,000 − $1,150,000 = $170,000
- 50% CGT discount (held more than 12 months): $170,000 ÷ 2 = $85,000 added to Sarah’s taxable income
- Sarah’s other taxable income is $95,000, so her total taxable income becomes $180,000
- Tax on $95,000 (2026-27 rates): $19,020. Tax on $180,000: $47,670. Extra income tax: $28,650
- Extra Medicare levy at 2% on the $85,000: $1,700
- Total extra tax: $30,350
That is the cost of missing the two-year window by 18 months. The growth while Margaret was alive is never taxed — the $630,000 gain from her $520,000 purchase price to the $1,150,000 value at death is wiped out by the cost-base reset. Only post-death growth is taxed, but $30,350 is a real bill, avoidable if the sale can be completed inside two years.
Example 3 — $400,000 of super left to an adult child: $54,400 in tax
Robert dies with $400,000 in super — a $320,000 taxable component and an $80,000 tax-free component — left to his daughter Emma, 34, financially independent and therefore a non-dependant for tax purposes.
- Tax-free component: $80,000 — no tax
- Taxable component: $320,000 × 15% = $48,000, plus 2% Medicare levy of $6,400
- Total tax: $54,400. Emma keeps $345,600.
Had Robert directed the benefit to his estate instead, the Medicare levy would not apply: tax of $48,000, and Emma would keep $352,000. That $6,400 difference is a planning decision made before death, not after. Had the same $400,000 gone to his spouse, the tax would be nil.
What the 1 July 2027 CGT reform means for inherited assets
From 1 July 2027, the CGT rules change for disposals after that date. Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, the 50% CGT discount is replaced by CPI indexation of the cost base plus a 30% minimum tax on real gains. Inherited assets are not exempt: sell after 1 July 2027 and the new rules apply to your gain, so the worked examples above will no longer describe your outcome. Model both sides of the date before deciding when to sell. Our guide to the CGT reform from 1 July 2027 explains the new rules with worked examples.
Common mistakes
Assuming the inheritance itself is taxed. Cash, a house and shares pass to you tax-free. The tax comes later, on sale or on income — spend the inheritance first and discover the CGT bill at sale time, and the money may already be gone.
Missing the two-year window. The single most expensive mistake in this area. Probate delays, family disagreements and renovations all eat the clock, and every month past two years turns post-death growth into taxable gain. Diary the two-year date on the day of the death, and check the PCG 2019/5 extension conditions if the sale slips.
Using the wrong cost base. For a main residence kept past two years, the cost base is the market value at death; for an investment asset, it is the deceased’s original cost base. Mixing these up is the most common error on deceased-estate tax returns, and it usually means overpaying.
Assuming the will covers super. It usually does not. Super is paid under the fund’s binding death benefit nomination, not the will. An out-of-date nomination — an ex-spouse still named — can send the benefit to the wrong person and trigger avoidable tax.
Executor checklist
- Get a date-of-death valuation for every property and significant asset. This single document determines the cost base for everything that follows.
- Find the deceased’s purchase records — contracts, settlement statements, stamp duty receipts — for every investment asset. Without them the inherited cost base cannot be proved.
- Diary the two-year date (two years from the date of death) for any inherited main residence. If the sale will not settle by then, check the PCG 2019/5 extension conditions and keep evidence of the delay.
- Apply for probate promptly. Delays here delay everything else, including the two-year window.
- Check the superannuation nominations — who is named, whether the nomination is binding, and whether the benefit should go directly or via the estate (the Medicare levy difference).
- Lodge the date-of-death tax return and register the estate for its own tax file number. Estate income during administration is taxed in the estate, not in the beneficiaries’ returns — see our guide to the deceased estate tax return.
- Get advice before selling if the estate includes foreign beneficiaries, trust-owned assets, or a sale straddling 1 July 2027.
Frequently asked questions
Do I pay tax when I inherit money in Australia?
No. Receiving cash from a deceased estate is not a taxable event. You pay tax only on income the money earns after you receive it — interest, dividends or rent.
Do I pay tax if I inherit my parents’ house?
Not when you inherit it. If the house was your parent’s main residence and you sell it within two years of their death, you generally pay no CGT at all. Keep it longer and CGT applies to growth after the date of death, using the market value at death as your cost base.
Why was 17% withheld from my inherited super?
Because you are a non-dependant for tax purposes — typically a financially independent adult child. The taxable component paid to a non-dependant is taxed at 15% plus the 2% Medicare levy. The same benefit paid to a spouse or a child under 18 is tax-free.
Does the two-year window start at death or at probate?
At the date of death. The contract of sale must be signed within two years of the death. Probate delays do not pause the clock, although the ATO’s PCG 2019/5 can extend the period by up to 18 months where the delay was outside your control.
Is the government bringing back inheritance tax?
No. There is no legislation to reintroduce one, and neither major party has proposed it.
Do I pay stamp duty to transfer an inherited house into my name?
Generally no. In Victoria the transfer is exempt under section 42 of the Duties Act 2000; in New South Wales only nominal duty — typically $50–$100 — applies.
There is no inheritance tax in Australia, and there has not been one since 1979. What there is, is a set of taxes that attach to what you do with an inheritance after you receive it. Sell a main residence within two years and the tax is usually nil. Keep it, rent it out, and sell it later, and the post-death growth is taxed at your marginal rate. Take super as an adult child and 17% — or 32% on untaxed elements — comes off the taxable component. Get the date-of-death valuation, diary the two-year date, check the super nominations, and model the sale before you sign a contract. A few hours of planning at the start of an estate routinely saves tens of thousands at the end of it.
This article is general information, not tax or legal advice. Tax outcomes depend on your circumstances — get advice from a registered tax agent or solicitor before selling an inherited asset or making decisions about a superannuation death benefit.
