Australia has no inheritance tax or estate tax, and passing a property from a deceased parent to a child is generally not a taxable event for capital gains tax. The costs that families actually meet come later: stamp duty on the transfer (in Victoria, usually none where the transfer follows the Will or the intestacy rules), FIRB approval for some overseas beneficiaries, land tax and income tax while the property is held, and capital gains tax and foreign resident withholding when it is sold.
Below we take each tax in the order a family meets it, focusing on Victoria with a brief note on New South Wales. Outcomes depend on the facts, so obtain advice from an accountant or tax adviser before acting.
Step 1: On death – no inheritance tax
No Australian state or the Commonwealth levies inheritance tax, estate duty or gift tax. The size of an estate does not, by itself, produce a tax bill.
Death is also not a CGT event in the ordinary sense. Under Division 128 of the Income Tax Assessment Act 1997, a capital gain or loss is disregarded when a property passes from the deceased to their legal personal representative (the executor or administrator), and when it passes from the legal personal representative to a beneficiary. In effect, tax is deferred until the property is eventually sold.
The beneficiary does, however, inherit a cost base, which determines the tax on a later sale. Our article No Inheritance Tax in Australia? Capital Gains on Death, Foreign Beneficiaries and Gifts from Overseas covers the wider picture.
Which cost base does the beneficiary take?
- Property the deceased acquired on or after 20 September 1985: generally, the deceased’s own cost base (purchase price plus eligible costs).
- Property the deceased acquired before 20 September 1985 (a pre-CGT asset): generally, its market value at the date of death.
- The deceased’s main residence, not used to produce income just before death: generally, market value at the date of death.
Where market value at death matters, a sworn valuation obtained soon after death is far easier to rely on than one prepared years later.
Step 2: Transfer to the beneficiary – stamp duty
Victoria
Under section 42 of the Duties Act 2000 (Vic), a transfer of land by a legal personal representative to a beneficiary, made without valuable consideration under the Will or on intestacy, is exempt from duty. The State Revenue Office explains how it applies the exemption in Revenue Ruling DA-051.
The exemption depends on the transfer conforming to the beneficiary’s entitlement:
- if a beneficiary receives more than their entitlement (for example, one child takes the whole house and pays siblings out in cash), duty can be charged on the excess;
- where a gift is conditional (for example, on the beneficiary paying an amount into the estate), the condition must be strictly complied with, or the whole transfer may be dutiable;
- arrangements that depart from the Will, such as a deed of family arrangement, need their duty consequences checked before they are signed.
Because a conforming transfer is exempt, foreign purchaser additional duty should not generally arise merely because the beneficiary is a foreign person.
New South Wales (briefly)
In New South Wales, a transfer to a beneficiary under and in conformity with the Will or the intestacy rules attracts a fixed concessional duty (currently published by Revenue NSW as $100). Revenue NSW states that foreign beneficiaries are not liable for surcharge purchaser duty where the property is received in conformity with the Will, but may be where the transfer varies it.
Step 3: Overseas beneficiaries – is FIRB approval needed?
This depends on two questions: whether the beneficiary is a “foreign person” under the foreign investment laws, and whether the property passes under a Will or on intestacy.
- Foreign person: broadly, an individual not ordinarily resident in Australia. Australian permanent residents, and New Zealand citizens ordinarily resident here, are generally not foreign persons. Australian citizens living overseas generally have an exemption for residential land.
- Inheriting under a Will: since 1 January 2021, an acquisition of Australian land by a foreign person under a Will is no longer automatically exempt. A foreign beneficiary will generally need to notify FIRB, obtain a no-objection notification and pay the application fee, ideally before the executor transfers the property.
- Inheriting on intestacy: an interest acquired by devolution by operation of law is exempt under section 29 of the Foreign Acquisitions and Takeovers Regulation 2015. The facts should still be checked in each case.
Does the ban on buying established dwellings stop an inheritance?
Since 1 April 2025, foreign persons have been banned from purchasing established dwellings. The ban was originally for two years; the 2026–27 Budget extended it to 30 June 2029. The ban is directed at purchases. An inheritance is not a purchase, and the ban does not, of itself, take away a foreign beneficiary’s entitlement.
That does not mean the property can simply be transferred. A foreign beneficiary taking under a Will still needs approval, and FIRB can impose conditions, including a requirement to sell within a set period. The published guidance does not deal specifically with inheritances during the ban, so advice should be taken before any transfer. An approved foreign owner may also have an annual vacancy fee return obligation.
Where a foreign beneficiary does not wish to apply, the usual alternative is for the estate to sell and distribute the net proceeds. Will-makers can plan ahead; see Foreign Beneficiary Exclusion Clauses in Wills and Testamentary Trusts.
Step 4: While the property is held – land tax and income tax
Victorian land tax
Where the property was the deceased’s home, the principal place of residence exemption can continue during administration for a limited period, ending at the earlier of a time fixed by the legislation and the property vesting in the beneficiary. Conditions apply; deriving income from the land can end it. After that, or for an investment property, land tax is generally payable.
Two surcharges matter to overseas families:
- Absentee owner surcharge: payable by owners who are not Australian citizens or permanent residents and who do not ordinarily reside in Australia. The rate is currently 4%, on top of ordinary land tax. Land held on trust can be affected where beneficiaries are absentees. For a foreign beneficiary who takes title and keeps the property, this becomes an annual cost.
- Vacant residential land tax: since 2025 this applies across Victoria. It is charged on the capital improved value of a home left vacant for more than six months in the preceding calendar year: 1% in the first year, 2% for a second consecutive year and 3% from the third. Deceased estates have an exemption for a period after death, but a home left empty once that period ends will attract the tax.
Income tax on rent
Rent is assessable income. During administration, the executor lodges trust tax returns for the estate and will usually pay tax on behalf of a beneficiary who is a foreign resident. Once the property is transferred, the beneficiary declares the rent in their own return. Non-residents have no tax-free threshold and are taxed from the first dollar at non-resident rates.
Step 5: On sale – capital gains tax
The two-year rule and main residence exemption (in brief)
Where the property was the deceased’s main residence, a sale that settles within two years of death is generally fully exempt, and there are other limbs (for example, where a beneficiary lives in it). There are additional restrictions for foreign residents. We cover these rules in detail in a separate article.
The 50% discount and foreign residents
- Australian residents: individuals and trusts may claim the 50% CGT discount if the asset was held for at least 12 months. For a post-CGT inherited property, the deceased’s period of ownership counts towards the 12 months.
- Foreign residents: generally cannot claim the discount on gains accruing after 8 May 2012. Australian real property is taxable Australian property, so foreign residents pay CGT on its sale.
- Changes from 1 July 2027: legislation that received Royal Assent in June 2026 replaces the 50% discount for individuals, trusts and partnerships with cost base indexation, together with a 30% minimum tax on capital gains for resident individuals, for gains accruing on or after 1 July 2027. Gains accrued before that date keep the old treatment, worked out by valuation or a prescribed apportionment method. Foreign residents broadly keep their existing treatment. Families planning a sale around 2027 should speak with their accountant about timing and valuations now.
For more on overseas beneficiaries, see Capital Gains Tax and Overseas Beneficiaries.
Foreign resident capital gains withholding and clearance certificates
For contracts entered into on or after 1 January 2025, the buyer of any Australian real property, whatever its price, must withhold 15% of the purchase price and pay it to the ATO at settlement. The exception is where the seller gives the buyer an ATO clearance certificate, confirming Australian residency, on or before settlement.
- An executor can apply as trustee, attaching the Will or grant.
- A certificate is valid for 12 months from issue, and processing can take weeks, so apply when the property is listed.
- A foreign resident seller cannot obtain a clearance certificate. The amount withheld is credited against the tax assessed, any excess is refunded, and a variation of the withholding rate can be sought in advance.
On a $1.5 million sale without a certificate, $225,000 is withheld.
Sell through the estate, or transfer first?
| Issue | Executor sells | Transfer to beneficiary, who then sells |
|---|
| FIRB | Beneficiary generally need not apply | Foreign beneficiary under a Will generally needs approval |
| Stamp duty | Paid by the buyer at ordinary rates | Transfer under the Will generally exempt (Vic) |
| Two-year rule | Available to the executor | Available to the beneficiary |
| CGT | Assessed through the estate; executor usually pays for foreign resident beneficiaries | Assessed to the beneficiary on their own residency |
| Withholding | Clearance certificate sought for the estate | Depends on the beneficiary’s residency |
| Holding costs | Land tax during administration | Land tax and any surcharges in the beneficiary’s name |
The better route depends on residency, whether anyone wants to keep the property, and how the estate is shared. Decide after the grant and before listing.
Foreign resident beneficiaries and CGT event K3
Where the deceased was an Australian resident and an asset passes to a foreign resident beneficiary, CGT event K3 can treat the deceased as having sold the asset just before death, with the gain taxed in the date-of-death return. K3 does not apply if the asset is taxable Australian property in the beneficiary’s hands, and Australian real property is. An Australian house left to an overseas child therefore does not generally trigger K3; Australian tax is collected when it is later sold.
Sending the proceeds to China or elsewhere
Australia does not cap estate money sent overseas, though banks verify the source of funds. Mainland China applies an annual foreign exchange quota for individuals (commonly cited as US$50,000 a year); larger amounts generally require proof of the inheritance and source of funds, and practice varies, so consult the receiving bank first.
Whether the home country taxes the money is a question of local law. Mainland China has no inheritance tax at present, but Chinese tax residents are in principle taxable on worldwide income, and a gain on selling overseas property may need to be reported, with credit for Australian tax paid. Taiwan has an estate and gift tax, and the deceased’s domicile affects its reach. Hong Kong, Singapore and Malaysia currently have no estate duty. Local tax advice should be obtained. Where the deceased lived overseas, see When the Deceased Died Overseas With Australian Assets: What to Do.
Summary: at which step, which tax, who pays
| Step | Tax or cost | Who pays | Key point |
|---|
| Death | Inheritance tax | – | None in Australia |
| Passing to executor and beneficiary | CGT | – | Disregarded under Div 128; beneficiary takes a cost base |
| Transfer to beneficiary | Stamp duty | Beneficiary/estate | Vic: generally exempt if it conforms to the Will or intestacy; NSW: fixed concessional duty |
| Transfer to a foreign beneficiary | FIRB fee | Beneficiary | Approval generally needed under a Will; intestacy generally exempt |
| Holding | Land tax, absentee owner surcharge, vacant residential land tax | Estate, then owner | Home exemption can continue for a limited period; 4% absentee surcharge |
| Renting | Income tax | Estate/beneficiary | No tax-free threshold for non-residents |
| Sale | CGT | Estate or beneficiary | Two-year rule; no discount for foreign residents; new rules from 1 July 2027 |
| Settlement | 15% withholding | Seller (withheld by buyer) | Resident sellers need a clearance certificate |
| Sending money home | Local tax and FX rules | Beneficiary | Check with the local bank and adviser |
Practical points and common mistakes
- No date-of-death valuation. For pre-CGT property and the deceased’s home, the cost base depends on market value at death.
- Assuming the two-year rule takes care of itself. It turns on settlement, not exchange, and a slow probate can use up much of the period.
- Transferring to an overseas child before FIRB approval. A foreign beneficiary under a Will who takes title without approval risks penalties.
- Informal sibling buy-outs. Departing from the Will’s shares can attract duty.
- Forgetting the clearance certificate. Even where everyone lives in Australia, the buyer must withhold 15% without one.
Frequently asked questions
How much tax do I pay if I sell my parents’ house in Australia?
It depends on whether it was their main residence, when the sale settles, the cost base and the seller’s residency. A sale within two years of death may be fully exempt; otherwise CGT is calculated on the gain, with a discount for residents but generally not for foreign residents. An accountant should run the numbers.
Does an overseas child need FIRB approval to inherit Australian property?
If the child is a foreign person inheriting residential property under a Will, generally yes. Property acquired on intestacy is generally exempt, and Australian citizens living overseas generally have an exemption.
Can a foreigner still inherit a house during the foreign buyer ban?
The ban applies to purchases, and an inheritance is not a purchase. A foreign beneficiary under a Will still needs FIRB approval, which may come with conditions such as a sale.
How we can assist
We act for executors and beneficiaries, including family members in mainland China, Hong Kong, Taiwan, Malaysia and Singapore, on probate, the transfer or sale of estate property, FIRB applications, clearance certificates and land tax. We work alongside the family’s accountant and overseas advisers.
Related reading
Chua Tan Associates acts for families, executors, trustees and their professional advisers in estate planning, estate administration and estate disputes in Australia and across borders. To arrange a confidential consultation, please contact our Melbourne office on +61 3 9602 3988 or submit an enquiry. Advice is available in English, Mandarin and Cantonese.
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal or tax advice.
简体中文 
English (Australia) 
繁體中文