Settling a loved one's estate involves many decisions made at a difficult time. When the estate includes real estate, one of the first practical questions is what the property was worth on the date of death. That figure can matter for tax, for probate and for dividing the estate between beneficiaries.
General information only. Estate and tax rules are detailed and vary by state, so talk to the estate's solicitor and an accountant about your specific position.
When the Date-of-Death Value Matters for CGT
Under the ATO's guidance on inherited assets, whether you need a date-of-death valuation depends largely on when the deceased person acquired the property:
- Acquired before 20 September 1985 (pre-CGT). The beneficiary's cost base is generally the property's market value on the day the person died. Without a supported valuation, there is no reliable starting point for working out a gain when the property is sold.
- Acquired on or after 20 September 1985. The beneficiary usually takes over the deceased's cost base, which should already be recorded, so a date-of-death value is often not the key figure. There are exceptions, particularly where the property was the deceased's main residence.
The ATO says that if the deceased acquired an asset before 20 September 1985, you need to know its market value at the date of death, and if the legal personal representative (the executor) has had the asset valued, the beneficiary should be given a copy of the valuation report. If no valuation was done, the beneficiary may need to obtain one.
The Two-Year Main Residence Rule
The ATO also describes a CGT exemption for an inherited home. A property can be exempt from CGT if it is sold within two years of the person's death and either it was acquired before September 1985, or at the time of death it was the deceased's main residence and was not being used to produce income. The two-year period can be extended in exceptional circumstances outside your control. Beyond that window, other rules apply, and the treatment of major improvements has nuances, so confirm the position with the ATO's current inherited asset guidance or your tax adviser.
Probate and the Estate
Executors are generally required to account for the estate's assets. Whether a formal valuation is needed for the probate application depends on the state and the circumstances. Some legal sources suggest a written professional valuation is sensible for higher-value or unusual properties, such as rural land or prestige homes, rather than relying on guesswork. Ask the estate's solicitor what is required where you are.
How a Retrospective Valuation Works
A date-of-death valuation looks back in time. The valuer assesses the property as it was on that date, not as it is today. They rely on sales evidence from the relevant period, council and title records and historical market data, and they inspect the property to understand its present condition. Where the home has been cleaned out, repaired or renovated since the death, they need evidence of how it looked then.
The ATO's valuation guidance says a valuation should be objective and supported by evidence, and that the valuer should have the knowledge and experience to value that kind of asset. Executors should therefore ask for a report from a certified practising valuer, and for the valuation date and purpose to be stated clearly.
Documents That Help the Valuer
- The date of death and a copy of the death certificate.
- The certificate of title, plans and council rates notices.
- Photos or inspection notes showing the condition around the date of death.
- Records of renovations, repairs and any unapproved structures.
- Any lease or rental details if the property was tenanted.
- Earlier valuations, insurance assessments or sale contracts.
Dividing the Estate Fairly
When one beneficiary keeps the property and others receive cash, or the home is sold and proceeds shared, an independent figure helps avoid disagreement. A report prepared for estate purposes states its purpose and date, which is not the same as an agent's sales appraisal. Our guide to valuation vs market appraisal explains the difference.
If you are managing an estate and need a property valuation, please contact our team. We will explain the process and what we need from you.
