This page is for executors, administrators and the lawyers who act for estates. If you inherited a property, our inherited property page is written for beneficiaries. Here we cover when the tax law uses a date of death value, the main residence rules for an estate in general terms, what changes if the estate sells the property or passes it to a beneficiary, and what to gather.
Who the tax law treats as the executor
The tax law’s term is legal personal representative, which includes an executor or administrator of the estate of someone who has died (section 995-1 of the Income Tax Assessment Act 1997). The ATO says this is usually the executor named in the will, or an administrator appointed by the court, and that an estate can have more than one.
When does the tax law use the date of death value?
When someone dies, the executor, and any beneficiary the property passes to, are treated as having acquired it on the day of death (section 128-15). What it counts as costing them depends on how the person who died held it:
| How the deceased held the property | What the tax law generally uses |
|---|---|
| They acquired it before 20 September 1985 | Its market value on the date of death, as the cost base for the executor or beneficiary (section 128-15) |
| It was their home just before they died, and was not being used to earn income | Its market value on the date of death, as the cost base (section 128-15) |
| It passes to a charity or other tax-exempt entity, to the trustee of a complying super fund, or in some cases to a foreign resident | A capital gain or loss for the deceased just before death, worked out from the market value on the date of death and reported in the date of death return (section 104-215) |
| Any other case | The deceased’s cost base, which does not normally involve a valuation |
Conditions and exceptions apply to each. Under the rule for property passing to a charity or super fund, for example, a gain or loss is disregarded if the deceased acquired the property before 20 September 1985, and it can be disregarded for some gifts to deductible gift recipients. The estate’s accountant decides which rule applies.
The main residence rules for an estate, in general terms
A capital gain or loss on a home from a deceased estate can be disregarded, for a beneficiary or for the trustee of the estate, when two sets of conditions are met (section 118-195). Broadly:
- the person who died acquired it before 20 September 1985, or it was their main residence just before they died and was not then being used to produce income, and
- the estate or the beneficiary disposes of it within two years of the death, or a longer period the Commissioner allows, or from the death until then it was the main residence of the deceased’s spouse, of someone with a right to occupy it under the will, or of the beneficiary who disposes of it.
The ATO says the two-year test is met if the property is disposed of under a contract that settles within two years of the death. Other conditions apply, for example where the person who died was a foreign resident. Where the exemption does not apply in full, the home may still be partly exempt (section 118-200). The ATO says you then need the cost base, which may be the date of death value (section 128-15), and the proportion that is exempt. The estate’s accountant works out whether and how these rules apply.
Selling during the administration, or passing it to a beneficiary
Whether the estate sells the property or passes it to a beneficiary changes who makes any capital gain, but not the starting point:
- Passing it to a beneficiary. A capital gain or loss the executor would otherwise make when the property passes to a beneficiary, under the will or the intestacy rules for example, is disregarded (section 128-15). The ATO says there are generally no capital gains tax consequences when a beneficiary inherits in these ways, and that a capital gains tax event may happen when the beneficiary later sells, unless an exemption applies.
- Selling it during the administration. If the executor sells the property, the normal capital gains tax rules apply to any gain or loss the estate makes, measured from the same cost base. A sale under the executor’s power of sale is not the property passing to a beneficiary, even if a beneficiary is the buyer (section 128-20).
Either way, a home that meets the conditions above may be exempt: the ATO says the same exemption applies to the trustee of a deceased estate as to a beneficiary. A beneficiary can also generally include in their cost base costs the executor could have included, such as conveyancing on the transfer (section 128-15), so keep the estate’s invoices. Which course suits the estate is a matter for the will, the estate’s lawyer and its accountant.
Other reasons an estate may want a date of death value
- The beneficiaries’ records. The ATO tells someone who inherits a person’s home to keep a record of its market value when the person died and, if the executor or trustee has had it valued, to get a copy of the report. One report, named for the right people, saves each beneficiary finding their own figure.
- Sharing the estate fairly. When one beneficiary keeps the property and others receive cash, an independent value at an agreed date helps keep the split fair.
- The estate’s records. The estate’s lawyer can tell you whether the probate application or the estate’s accounts ask for values, and at which date.
A report can be relied on by the client named in it and anyone we agree to in writing, for the purpose and date it states. Tell us at the start if the beneficiaries, the estate’s lawyer or its accountant will rely on it.
Desktop or inspected?
The Desktop CGT Valuation, $149 including GST, suits most standard homes, units and vacant lots. An inspection adds most where the property is unusual or high value, or where it is still largely as it was on the date of death, such as a home that has not yet been cleared or changed. The Inspected CGT Valuation is $495, and a second valuation date in the same report is $149. Commercial, rural and development property, and anything likely to be worth more than $3 million, is quoted before anything is booked.
What to gather
The property is valued as it was on the date of death, whenever the report is prepared, using sales evidence from around that date. These help the valuer and the estate’s accountant:
- the date of death, and the grant of probate or letters of administration if there is one
- who the report should name as the client, and who else will rely on it
- the address and the type of property
- when and how the deceased acquired it, such as the purchase contract and settlement statement, for the accountant
- plans, approvals and invoices for renovations or extensions, with dates
- how the property was used: lived in, rented or used for a business, and when
- photos and any sales or rental listing from around the date of death
- what has changed since the death, such as repairs, a clean-out or a renovation
- for apartments and townhouses, strata records of any major works
If something cannot be found, the report states what the valuer has assumed. The executor’s property checklist explains why each record matters, and valuing at a past date explains how a date of death valuation is prepared months or years later.
How to request
- Request online and choose “I inherited a property” as the reason, even if you are the executor. Under “Your connection to the property”, choose “I am acting for the owner (for example an executor)”.
- Choose a past date and enter the date of death.
- In the notes, say who the report should name as the client, who else will rely on it, and what has changed since the death.
- We confirm the valuer, fee and timing in writing. Nothing is booked or charged until you accept.
- You receive a signed PDF report by email, reviewed and signed by a property valuer.
We value property. We do not give tax or legal advice. The estate’s lawyer advises on the will and the administration, and its accountant on capital gains tax, including which rules apply and when.