Deceased estate property: transferring or selling a home after a death in NSW, VIC and QLD

The first question after a property owner's death is not whether to sell. It is how the property was held. Joint tenancy, tenancy in common and sole ownership lead to different steps, and the will does not control every property in the same way.

Checking the title gives the executor and family a starting point. From there, establish who has authority, whether the property will pass to a beneficiary or be sold, and what needs to happen before the title can change. The conveyancing sits alongside the estate administration and accounting advice, not in place of them.

Start with the title: joint tenants or an estate asset?

Where the owners were joint tenants, the surviving joint tenant takes the whole property by survivorship, outside the will. The title is updated by a survivorship application, called a notice of death in NSW, with the death certificate. No grant of probate is needed for that step.

That is different from a property held as tenants in common. The deceased's share forms part of the estate. A solely owned property also forms part of the estate. It passes under the will or, where there is no will, under the intestacy rules.

For an estate asset, the executor or administrator needs authority to deal with it. Do not assume that being a surviving spouse or a beneficiary answers the title question; first establish how the property was owned and how the interest passes.

Probate and letters of administration

With a will, the executor applies to the Supreme Court of the state for probate. Without a will, a next of kin applies for letters of administration. The grant lets the executor be registered on title and sign a transfer or a contract of sale.

Each state's registry can, for small or simple estates, register a transmission without a grant. But a buyer's lender and most buyers' conveyancers will expect a grant where the property is being sold. A registry's ability to register a transmission is not the same question as what a buyer's side will require.

Allow for the court's processing time before planning a sale or transfer. Do not build the plan around an assumed completion date for the grant.

Route one: transfer the property to a beneficiary

A transmission application registers the executor, or the beneficiary directly in some registries. A transfer then moves the property to the beneficiary named in the will. The documents need to reflect the route the property is taking.

Duty treatment depends on the state and whether the transfer conforms to the will or intestacy rules:

• in NSW, a conforming beneficiary transfer attracts nominal duty only under section 63 of the Duties Act 1997
• in Victoria, it is exempt under section 42 of the Duties Act 2000
• in Queensland, it is exempt under the Duties Act 2001.

Where beneficiaries rearrange who gets what, the position changes. If one buys out another, for example, the part that does not conform to the will is dutiable at ordinary rates on market value. A beneficiary receiving property and beneficiaries changing the distribution are not the same transaction.

Our property transfer service handles the conveyancing for a transfer. The family transfer article explains the wider market value and duty questions.

Route two: the estate sells the home

The executor signs the contract as executor once registered, or with the grant in hand and the transmission to follow before settlement. The usual vendor disclosure for the state applies, and the sale proceeds go to the estate.

A buyer's conveyancer will check the grant, the transmission and the executor's authority. Those documents are part of getting the estate ready to sell, rather than something to assume the buyer will overlook.

The selling conveyancing service covers the property transaction. It sits alongside the work needed to establish the executor's authority and administer the estate.

Capital gains tax: take accounting advice before choosing

The main residence exemption can carry through a deceased estate. A dwelling that was the deceased's main residence is generally exempt from capital gains tax if it is sold and settled within two years of the date of death. The ATO can extend that period in some circumstances.

Otherwise, the gain is worked out from the deceased's cost base or the market value at death, depending on when the property was acquired. Beneficiaries should take accounting advice before deciding whether to sell or keep it.

The decision is therefore not only about who will hold the title next. Check the tax position while considering the two routes, rather than treating the conveyancing documents as a substitute for that advice.

Keep the property's costs and insurance in view

Land tax, council rates and water keep accruing while the estate holds the property. Insurance should also be checked, since some policies lapse when a home is unoccupied.

Secure and insure the property as part of the practical work. A property waiting for a grant, a beneficiary transfer or a sale still needs attention while the estate holds it.

What if there is a mortgage?

The lender is paid out from a sale. For a transfer to a beneficiary, the lender must agree to the beneficiary taking over or refinancing the loan before the transfer can register.

The mortgage therefore belongs in the planning for either route. The title documents and the estate's decision do not remove the need to deal with the lender.

A practical sequence for the executor

The steps are:

• obtain the death certificate and locate the will
• check the title to see how the property was held
• apply for the grant
• secure and insure the property
• obtain a valuation at the date of death for tax and estate purposes
• decide with the beneficiaries whether to transfer or sell
• instruct a conveyancer for the transmission, transfer or sale
• settle rates, land tax and the mortgage from the estate
• distribute.

For the sale process, read the selling guides for NSW, Victoria and Queensland. For a beneficiary transfer, start with our property transfer service.