Bright-line Test and Inherited Property

Question

We have a client who inherited three rental properties in Sept 2017. We are looking at transferring these properties into a Trust the client has created. Will they be caught under the brightline test and if so how will the gain be calculated, as she didn’t pay anything for the properties.

Answer

Sections CB 6A(3) and FC 9 of the Income Tax Act 2007 apply. When a person dies, their property may be sold or transferred to a beneficiary, who may subsequently sell the property. These transfers and disposals will not be subject to tax under the bright-line test.