Buying Out Siblings on an Inherited Property: The Duty, the Tax and the Finance
There is a $100 duty concession for property that comes to you from a deceased estate. It does not apply to a buy-out. If three of you inherit equally and one keeps the house, standard transfer duty is assessed on two-thirds of the property’s value, on top of the cash needed to pay the others out.
The short answer
To buy out your siblings on an inherited property you need enough finance to pay them their share and to cover transfer duty on the portion you acquire beyond your own entitlement. In New South Wales a transfer from a deceased estate that follows the will attracts concessional duty of $100, but a buy-out does not follow the will, so standard transfer duty applies to the extra share. With three siblings inheriting equally, that means duty assessed on two-thirds of the property’s value.
What You Are Actually Buying
It helps to be precise about the transaction, because the language people use hides it.
Nobody in this situation inherits a house. If three siblings are left a property equally, each inherits a one-third interest in it. When one of them keeps the house, they are doing two different things at once:
- Receiving their own one-third, which comes to them under the will.
- Buying the other two-thirds from their siblings, usually with cash from outside the estate.
Those two halves are treated completely differently by the revenue office, by the tax system and by a lender. Almost every expensive surprise in these transactions comes from treating the whole thing as an inheritance when most of it is a purchase.
Nobody inherits a house. You inherit a fraction of one, and buy the rest.
The Duty, and the Assumption That Costs the Most
New South Wales does have a concession for deceased estates. Revenue NSW puts it plainly: “You may be eligible for the concessional transfer duty rate of $100 if you receive property from a deceased estate and the transfer meets certain requirements.” The amount rose from $50 to $100 on 1 February 2024.
The requirement that matters is that the transfer must be under and in conformity with the will, or with the intestacy rules, or a court order, or an appropriation towards satisfying what you were entitled to.
A buy-out is, by definition, not in conformity with the will. The will gave you a third. You are taking the whole thing.
What happens then is set out in Revenue Ruling DUT 046. Where beneficiaries agree to vary what the will provided, the dutiable value “is to be reduced by the portion of the dutiable value that is referable to the dutiable property to which the beneficiary had an entitlement” under the will. Revenue NSW states the consequence directly: “Any variation from the exact terms of the will means that any portion greater than their entitlement in the property will be liable for standard transfer duty rates.”
So your own share comes out, and you pay ordinary transfer duty on the rest.
| Beneficiaries sharing equally | Your own entitlement | Share assessed at standard duty |
|---|---|---|
| 2 | One half | One half |
| 3 | One third | Two thirds |
| 4 | One quarter | Three quarters |
Revenue NSW publishes a worked example that is exactly this situation: “Jo and Lee are siblings who are each entitled to receive 50% of their parent’s home under the will… Under the deed, Jo agrees to give up her interest in the property so that Lee will receive 100% ownership. In return, Lee agrees to compensate Jo with cash from outside the estate… Standard transfer duty applies to the additional 50% Lee receives as part of the buy-out.”
The part that catches people out
Here is the detail almost nobody accounts for, and it can be the difference between a workable deal and an unaffordable one.
The reduction is measured against your entitlement in that particular property, not your share of the estate overall.
DUT 046 works through it. Two beneficiaries share the residuary estate equally. It contains two properties, one worth $1,200,000 and one worth $1,000,000. Each is therefore entitled to $1,100,000 of value. The executor gives A the $1,200,000 property and B the $1,000,000 one.
A has received only $100,000 more than their entitlement to the estate. But A’s entitlement in the Wollongong property was a half share, worth $600,000. So duty is assessed on $600,000, not $100,000. B, whose transfer is within entitlement, pays the concessional amount.
Read across to a sibling buy-out and the lesson is the same. Offsetting a property against other estate assets does not reduce the dutiable portion of the property itself. If you are planning to take the house and let your siblings take the shares, the cash and the super, the duty does not shrink because the overall split is fair.
A deed of family arrangement does not avoid this either. It is the document that records the variation, and recording it is what takes you out of the concession and into the standard rate on the extra share.
Working out whether you can afford to keep the house?
Tell us the property value, how many beneficiaries there are and what else is in the estate. We will map what you need to borrow, what duty sits on top, and whether the numbers work before you commit to anything with your siblings. We will also tell you plainly if they do not. No obligation, and no fee at any point.
Two Clocks That Both Run for Two Years
There are two separate two-year periods running from the date of death. They are different rules with different consequences, and because they start on the same day they get conflated constantly.
| Clock | What it does | What ends it |
|---|---|---|
| Capital gains tax | A full main residence exemption can apply if the property is disposed of under a contract that settles within 2 years of the death | The 2 years expiring, unless a safe harbour extension applies |
| NSW land tax | The principal place of residence exemption continues after death, so the estate is not paying land tax on the home | Whichever comes first: 2 years, or ownership transferring to someone other than the personal representative or a beneficiary |
On the capital gains side, the ATO says you meet the two-year requirement “if you dispose of the property under a contract that settles within 2 years of the deceased’s death”, and that “It doesn’t matter if you used the property as your main residence or to produce income during the 2-year period.”
There is an extension, and it is automatic rather than something you apply for, but it has conditions. The ATO grants it where more than 12 months of the first two years was spent dealing with a listed circumstance, which includes the will or the ownership being challenged, the complexity of the estate, or a sale falling through for reasons outside your control. It also requires the property to have been listed for sale as soon as practicable, settled within 12 months of listing, and an extension of no more than 18 months. Waiting for the market to improve does not qualify, and neither do “unexplained periods of inactivity by the executor”.
On the land tax side, Revenue NSW continues the principal place of residence exemption after death for up to two years, ending earlier if ownership transfers to someone who is neither the personal representative nor a beneficiary.
Both of these are questions for your accountant on your actual numbers. They appear here because they have a habit of setting a deadline that nobody in the family realised existed until it had passed.
The Share You Buy Is Not Inherited
This one has no immediate cost and a significant delayed one.
The one-third that came to you under the will is inherited property, and it carries the cost base rules that go with that. Where the deceased acquired the property before 20 September 1985, the ATO treats the first element of your cost base as “the market value of the asset on the day the deceased died”. Where they acquired it on or after that date, you generally inherit their cost base instead, with an exception that restores market value where the property passed after 20 August 1996 and was the deceased’s main residence not used to produce income.
The two-thirds you buy from your siblings is not any of that. You acquired it as a purchaser, at what you paid, on the day you bought it.
So one house ends up with two different cost bases inside it, attached to two different portions, acquired on two different dates. If you sell years later, that split is what the calculation runs on. It is entirely manageable and it is very easy to forget, which is why it is worth having your accountant record it at the time rather than reconstructing it a decade later.
There is a matching consequence for the siblings being bought out. They are not simply inheriting and walking away. They are giving up their interest in return for money from outside the estate, which is a disposal rather than an inheritance. What that means for them depends on their circumstances, and it is a question for their own accountant rather than something to settle around a kitchen table.
The Timing Problem Nobody Plans For
The finance side of this has a sequencing problem built into it, and it is the single most common reason these deals stall.
You want to borrow against the house. The lender wants security over the house. But the house is still in the estate, and it cannot be transferred or mortgaged until the Supreme Court has granted probate, or letters of administration where there is no will or no executor able to act. Until that happens there is nothing for a lender to take security over.
Meanwhile your siblings, reasonably, would like to be paid.
Two practical notes. The Supreme Court of New South Wales publishes which lodgement dates it is currently processing, and updates it weekly, so you can see the real position rather than guess at it. And the wait for letters of administration has generally been considerably longer than for probate, which matters if your parent died without a will.
What you can do in the meantime is everything that does not require the title. Get your borrowing capacity assessed on your actual income. Establish what the property is likely to value at, because the duty and the payout both key off value. Agree the split with your siblings in principle. Have your solicitor prepare the deed of family arrangement. Then the finance can move quickly once the grant comes through, rather than starting from scratch at the moment everyone has run out of patience.
How to Approach It
- Get the property valued before you agree a number. Both the payout and the duty run off value, and a figure agreed from a real estate appraisal can move once a lender’s valuer attends.
- Budget duty on the bought share, not the whole property and not the nominal $100. For three equal siblings that is duty on two thirds of value, and it is payable in cash.
- Do not assume offsetting against other estate assets reduces it. Your entitlement in the property is what comes out, not your share of the estate.
- Check your own borrowing capacity early. You are qualifying for a loan large enough to pay out siblings and cover duty. That is usually a bigger loan than people expect.
- Get everyone their own advice. A solicitor for the deed of family arrangement, and an accountant each. Siblings on different sides of a transaction do not share an adviser.
- Write down who pays what. Duty, legal costs, valuation, rates and insurance during the estate period. These are small next to the payout and they are what arguments are actually about.
How Intellect Finance can help
On a buy-out like this we do three things. We work out early whether the numbers support keeping the house, including duty on the bought share, because that answer changes what you negotiate with your siblings rather than the other way around. We set up the finance so it can settle when the grant comes through instead of starting then. And we deal with the lenders whose policy actually accommodates a purchase from a deceased estate, which is a narrower group than the general market.
What we will not do is advise on the estate itself. Whether a deed of family arrangement is the right instrument, how the will should be interpreted, and what any of it means for each sibling’s tax position are questions for a solicitor and an accountant. We are not a registered tax agent and we do not give legal advice. What we can tell you is what can be borrowed, on what timeline, and what it costs.
A home loan for a property you will live in is regulated consumer credit under the National Consumer Credit Protection Act 2009, and Best Interests Duty applies. We charge you nothing on any loan type, with no arrangement fee and no clawback recovery fee. Penrith based since 2005, holding Australian Credit Licence 390611.
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Some of these came from families sorting out a property after a parent died, where the finance had to work around a court timetable.
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Frequently Asked
Inherited Property Buy-Out FAQs
What families ask when one of them wants to keep the house.
Do I pay stamp duty when I buy out my siblings on an inherited house?
In New South Wales, yes, on the share you acquire beyond your own entitlement. A transfer that follows the will attracts concessional duty of $100, but a buy-out varies the will, so standard transfer duty applies to the extra portion. With three siblings inheriting equally, that is duty on two-thirds of the value.
Does a deed of family arrangement avoid the duty?
No. A deed of family arrangement is the document that records the beneficiaries agreeing to vary the will. Recording that variation is precisely what takes the transfer outside the $100 concession, so duty is assessed on the difference between your entitlement in that property and what you actually receive.
Can I offset the house against other estate assets to reduce the duty?
Not for duty purposes. Revenue NSW measures the reduction against your entitlement in that particular property, not your share of the estate overall. Taking the house while your siblings take the cash and shares may be a fair split, but it does not reduce the dutiable portion of the house.
Can I get a mortgage before probate is granted?
Not against the estate property, because it cannot be transferred or mortgaged until the Supreme Court grants probate or letters of administration. You can do everything else in the meantime: get your borrowing capacity assessed, establish the likely valuation, and have the paperwork prepared so settlement follows the grant quickly.
How long does probate take in New South Wales?
It varies, and the Supreme Court of New South Wales publishes which lodgement dates it is currently processing and updates that weekly, so you can check the real position rather than rely on an estimate. Letters of administration, needed where there is no will or no executor able to act, have generally taken considerably longer than probate.
Is there capital gains tax on an inherited property?
Generally nothing happens when you inherit, but a CGT event can happen when the property is later disposed of. A full main residence exemption can apply where disposal settles within 2 years of the death, with an automatic extension in defined circumstances. Confirm your own position with your accountant.
Does the share I buy from my siblings have the same cost base as the share I inherited?
No. The inherited share carries the cost base rules for inherited assets, which depend on when the deceased acquired the property. The share you buy is acquired as a purchaser, at what you paid, on the date of the buy-out. One property can end up with two cost bases, which is worth recording at the time.
Do my siblings pay tax on being bought out?
They are giving up their interest for money from outside the estate, which is a disposal rather than simply an inheritance, so it can have tax consequences for them. What those are depends on their own circumstances. Each sibling should get their own accountant’s advice rather than relying on a shared view.
The bottom line
The $100 concession is real and it is widely known, which is the problem. It applies to a transfer that follows the will. The moment one sibling keeps the house and pays the others out, the will is being varied and most of the transfer is an ordinary purchase carrying ordinary duty.
For three siblings inheriting equally, that is duty on two-thirds of the property’s value, payable in cash, on top of the money needed to pay two people out. Budget for the $100 and the deal looks affordable. Budget for the real figure and it either works or it does not, and you find out before anyone has made a promise they cannot keep.
The other thing worth saying, because it goes unsaid in most writing on this, is that these conversations happen between people who have just lost a parent and who each have a different idea of what is fair. Getting the numbers right early is not a cold way to handle that. It is what stops the family disagreement being about money that was never going to be there.
Joseph Sukkar
Joe has spent more than 25 years arranging residential lending in Australia, including for families sorting out a property after a death, where the finance has to fit around a court timetable and a conversation between siblings. Intellect Finance charges clients no fee on any loan type. More about the team.
Sources
Revenue NSW, Revenue Ruling DUT 046 Deceased estates, for the operation of section 63 of the Duties Act 1997, the reduction where beneficiaries vary the will, and the worked example measuring entitlement against the individual property. revenue.nsw.gov.au
Revenue NSW, transfer duty concession for deceased estate transfers, for the $100 concessional rate, the conditions attaching to it, and the published sibling buy-out example. revenue.nsw.gov.au
Australian Taxation Office, inherited property and capital gains tax, for the 2 year disposal rule and the main residence exemption for an inherited dwelling. ato.gov.au
Australian Taxation Office, extensions to the 2 year ownership period, for the conditions of the automatic safe harbour extension and what does not qualify. ato.gov.au
Australian Taxation Office, cost base of inherited assets, for how the cost base differs depending on when the deceased acquired the property. ato.gov.au
Revenue NSW, land tax exemption for principal place of residence, and Revenue Ruling LT 082v6, for the continuation of the exemption for up to 2 years after death and what ends it. revenue.nsw.gov.au
Supreme Court of New South Wales, wills and probate, for what a grant of probate authorises, when it is required for real estate, and the currently published processing position. supremecourt.nsw.gov.au
Important disclosures, general advice warning and licensing
General information only. This article is general information only and does not constitute financial, credit, legal or tax advice. It does not take your personal or financial circumstances into account. Before acting on any information here, consider whether it is appropriate to your objectives, financial situation and needs.
New South Wales only. The transfer duty and land tax positions described are those of New South Wales. Every state and territory administers its own duty and land tax legislation, the concessions for deceased estates differ, and nothing here should be applied to a property outside New South Wales.
Legal. Wills, intestacy, deeds of family arrangement and the administration of a deceased estate are legal matters. The provisions described here are summarised in general terms from the revenue authority’s own guidance, are not a complete statement of the law, and their application depends on the terms of the will and the facts of the estate. Intellect Finance does not provide legal advice. Obtain advice from a solicitor, and beneficiaries on different sides of a buy-out should obtain separate advice.
Tax. Intellect Finance is not a registered tax agent. Capital gains tax outcomes, cost base calculations, the availability of the main residence exemption and the consequences for a beneficiary who is bought out all depend on individual circumstances. Confirm your position with your accountant or a registered tax agent.
Illustrative arithmetic. The proportions shown for two, three and four beneficiaries are arithmetic illustrating how the dutiable share is worked out where beneficiaries inherit a property in equal shares. They are not a duty calculation, they publish no duty rates, and the actual assessment depends on the will, the valuation and Revenue NSW’s assessment.
Figures and timeframes change. Duty concession amounts, tax thresholds and court processing times are set by others and move. The court publishes its current processing position and updates it regularly. Check the current position before relying on any of it.
Lender policy varies and changes. Descriptions of common practice are general observations, not any lender’s policy. This page publishes no interest rates and names no lenders. No broker can guarantee approval, pricing, a valuation outcome or a timeframe.
Best Interests Duty. A home loan for a property you will live in is regulated consumer credit under the National Consumer Credit Protection Act 2009, and Best Interests Duty applies.
What we charge you. Nothing, on any loan type. No arrangement fee for residential, commercial, corporate, asset, SMSF or personal lending, no fee for complex or specialist lending, and no clawback recovery fee if a loan is discharged early. Lenders pay us a commission on settlement, disclosed to you in writing in our Credit Guide before we provide credit assistance.
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Intellect Finance Pty Ltd holds Australian Credit Licence 390611 and is a member of the MFAA and AFCA. Lending criteria, fees and terms apply. Article checked 19 September 2026.
Next Reads
If You Are Taking On a Property
Inherited Property
Find out if you can keep the house
Tell us the property value, how many beneficiaries there are and what else is in the estate. We will map what you would need to borrow, what duty sits on top of it, and what can be put in place now so the finance moves as soon as the grant comes through. If the numbers do not work, you will hear that before you have promised anyone anything. Penrith based since 2005, clients Australia-wide. No fee on any loan type. ACL 390611.
General information only, and not legal or tax advice. Duty and land tax positions described are those of New South Wales and differ elsewhere. Estate matters belong with a solicitor, and tax outcomes with your accountant.
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