CGT Valuations for Inherited Property

Why deceased estates often need a valuation

When a property is inherited, its value at a relevant date can become important later — particularly if the property is eventually sold by the estate or a beneficiary, and a CGT calculation depends on knowing what it was worth at that earlier point.

Pre-CGT vs. post-CGT assets — why it changes the starting point

Whether a valuation is needed at all often comes down to when the deceased originally acquired the property:

• •If the deceased acquired the property before 20 September 1985 (when CGT began), the beneficiary's cost base generally resets to the property's market value at the date of death.
• •If the deceased acquired it on or after 20 September 1985, the beneficiary generally inherits the deceased's own cost base and acquisition date — carrying over their original purchase price and costs — unless the main residence rules below apply instead.

When the main residence rules reset the cost base to market value

Even for a post-1985 property, if it was the deceased's main residence and was not being used to produce income just before they died, the cost base is generally reset to its market value at the date of death rather than carried over from the deceased. This is one of the most common reasons a date-of-death valuation is needed, even where the general "carry over the deceased's cost base" rule would otherwise apply.

The two-year rule for a deceased's main residence

Where the property was the deceased's main residence, a beneficiary or the estate can generally access a full CGT exemption if the property is sold, or ownership is otherwise disposed of, within two years of the date of death — regardless of how it was used in the meantime. Beyond two years, the outcome depends on how the property was used by the deceased and the beneficiary, and can result in a full, partial, or no exemption.

What executors are generally responsible for

• •Understanding the estate's tax position, including any CGT implications
• •Obtaining appropriate professional advice on behalf of the estate
• •Arranging an independent valuation where one is required to support the estate's position
• •Retaining the valuation report as supporting evidence

Getting it right the first time

Because the relevant date for an inherited property is often some time in the past by the time a valuation is arranged, this is frequently a retrospective valuation. Engaging a valuer who understands both the property and the historical market conditions helps ensure the figure is properly supportable if it's relied upon later.

Why this matters beyond the tax return

A supportable date-of-death valuation doesn't just protect the estate's tax position — it's often relied on for probate, for equalising distributions between beneficiaries, and for resolving disagreements about what a property held by the estate was actually worth. Getting one early, rather than reconstructing the figure years later, tends to make administering the estate considerably smoother.