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Are there any CGT consequences when it comes to a deceased estate?

by , 07 April 2014
Fact: The taxman's arm extends past death. This may be hard to believe, but, you'll pay taxes even after you're dead. Continue reading to find out about the Capital Gains Tax (CGT) implications when it comes to a deceased estate so you can be well informed about tax law.

Revealed: CGT consequences for a deceased estate

If you've always thought the saying 'nothing is certain but death and taxes' is meaningless, you may just change your mind after reading this.

The reality is that if you die and you leave assets to someone, your deceased estate will pay CGT on the positive difference between the base cost of the assets and the market value of the assets on the date of your death.

The Practical Tax Loose Leaf Service says in terms of the law, the person you've left your assets to is said to get the assets at market value, which is now the base cost when it's disposed of later.

But it's not all doom and gloom.

The good news is that the transfer of these assets is tax free.


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CGT and a deceased estate: The following four disposals are tax-free on death:

#1: Assets inherited by a surviving spouse, including a usufructuary interest, aren't subject to CGT on the death of the testator;

SARS explains in its website that any CGT which would be due is payable before the inheritance is transferred to the beneficiaries.

#2: Assets left to a public benefit organisation;

#3: Long-term assurance policies, typically whole life and endowment policies are excluded from the CGT net; and

#4: Interests in South African pension, provident and retirement annuity funds.

There you have it. You can't escape the CGT net even after you've died. Knowing this bit of info will bring you a step closer to fully understanding tax law and how it works.

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