CGT Valuation for Deceased Estates and Inherited Property
Dealing with a deceased estate can involve many financial, legal and administrative responsibilities. When property is involved, establishing the property’s value may form an important part of the estate administration process.
For beneficiaries and executors, one question that can arise is whether a Capital Gains Tax valuation is required for an inherited property.
Depending on the circumstances, a valuation may need to establish the property’s market value at a particular historical date, including the date of death. This means the valuation may not simply be an assessment of what the property is worth today.
If you are dealing with an inherited property on the Central Coast, it can be helpful to discuss the requirements with the estate’s accountant, solicitor or tax adviser before arranging a valuation.
Why might an inherited property need a valuation?
The tax treatment of inherited property can depend on a range of factors, including the circumstances of the original ownership, the property itself and what happens to it after it is inherited.
Where a valuation is required, the relevant date can be particularly important.
For example, an adviser may require evidence of the property’s market value at a historical date associated with the deceased estate.
The Central Coast Property keyword research specifically identifies “CGT valuation deceased estate”, “CGT valuation inherited property”, “property valuation date of death” and “retrospective valuation date of death” as relevant searches.
What is a date of death property valuation?
A date of death property valuation is a valuation that establishes the market value of a property as at a specified date associated with the deceased estate.
This is different from asking a valuer:
“What is this property worth today?”
A historical valuation considers the market conditions and property circumstances relevant to the specified date.
This type of valuation may therefore be referred to as a retrospective property valuation.
Why is a retrospective valuation different from a current valuation?
Property markets change over time.
A property that is worth a particular amount today may have had a significantly different market value several years ago.
A retrospective valuation therefore needs to address the property and market circumstances relevant to the historical valuation date.
This can involve considering available evidence about the property and comparable sales or other relevant market information from the appropriate period.
What happens if the property is later sold?
An inherited property may eventually be:
• Sold by the estate.
• Transferred to a beneficiary.
• Retained by a beneficiary.
• Used as a private residence.
• Rented as an investment property.
The tax consequences can vary depending on the circumstances.
This is why it is important for executors and beneficiaries to obtain appropriate advice from their accountant, tax adviser or solicitor.
Where a professional property valuation is required, the adviser can identify the relevant valuation date and the type of valuation evidence needed.
What information should you provide to the valuer?
If you have been advised that a retrospective CGT valuation is required, it is useful to provide the valuer with as much relevant information as possible.
This may include:
• Property address.
• Relevant valuation date.
• Details of the property.
• Information about improvements or renovations.
• Available historical property documents.
• Information relating to the deceased estate.
• Any specific requirements provided by your accountant or solicitor.
The valuation should clearly identify the relevant date and purpose.
Do you need a current or retrospective property valuation?
This will depend on the purpose of the valuation and the advice you have received.
If the requirement relates to an earlier date, a retrospective property valuation may be appropriate rather than a current market valuation.
Before ordering a valuation, it is therefore worthwhile asking your accountant, tax adviser or solicitor:
“What date does the valuation need to be as at, and what purpose does the valuation need to address?”
Having this information before contacting a valuer can help ensure you request the appropriate service.
Professional property valuations for deceased estates
Central Coast Property provides property valuation services for a range of purposes, including situations where a historical valuation date may need to be considered.
If you have inherited property or are administering a deceased estate and have been advised that a valuation is required, our team can discuss the property and the relevant valuation requirements with you.
Independent and Professionally Prepared Valuations
Central Coast Property Advisory Service states that its valuations are completed in accordance with Australian Property Institute Guidance Notes. Its valuation process includes full internal and external inspections, detailed field notes, sales data, valuation calculations and clear statements of conclusions.
Need a valuation for an inherited property?
If your accountant, solicitor or tax adviser has recommended a CGT valuation for a deceased estate, contact Central Coast Property to discuss your requirements.
Providing the correct valuation date and purpose at the beginning can help ensure the valuation addresses the information your professional advisers require.
Contact Central Coast Property Advisory Service today to arrange a professional Commercial Property Valuation.