Deceased Estate Property Valuation: A Simple Guide for Executors and Beneficiaries

Managing a deceased estate is rarely straightforward, and property is usually the most complex part of it. Whether you are the executor of a will or a beneficiary who has inherited real estate, at some point you will need an independent property valuation. This guide explains why, what type of valuation is needed, and what happens to capital gains tax when the property is eventually sold.

Why an Independent Valuation Is Required When Someone Passes Away

When a person dies and their estate includes real property, a formal valuation is needed for several reasons. Probate courts require an assessment of the estate’s assets to confirm their value before the estate can be administered. If the property is to be sold, the executor needs to know its market value to ensure it is sold appropriately. And if the beneficiary later sells the inherited property, the ATO needs a market value at the date of death to calculate any capital gain.

A real estate agent appraisal does not meet this standard. What is required is a formal report prepared by a Certified Practising Valuer, dated as at the date of death, and supported by comparable sales evidence from that time.

The Date of Death Valuation Explained

The date of death valuation is exactly what it sounds like. It establishes what the property was worth on the specific date the owner passed away. This is a retrospective valuation because that date has already passed by the time the valuation is commissioned.

The valuer researches comparable property sales from around the date of death, considers the property’s condition and location, and produces a written report stating the market value as at that date. Even if the death occurred several years ago, a qualified valuer can still produce a defensible opinion using historical market data.

Real Scenario

Michael’s mother passed away in March 2022, leaving him her home in Adelaide that she had owned since 1989. His solicitor advised him that he needed a date of death valuation for probate purposes and that the same report would also establish his cost base for capital gains tax if he decided to sell. Michael contacted a certified valuer, provided the property address and the date of death, and received the report within five business days.

What the ATO Requires When You Inherit and Later Sell a Property

Inheriting a property does not automatically trigger a capital gains tax liability. CGT only applies when you sell the property or otherwise dispose of it. At that point, the ATO needs to know the cost base to calculate your capital gain.

For most inherited properties, the cost base is not the original purchase price paid by the deceased. It is the market value at the date of the deceased’s death. This means a date of death valuation is not just useful for probate. It directly determines how much CGT you will pay when you eventually sell.

There is an important exception worth knowing. If the deceased acquired the property before 20 September 1985, it is a pre-CGT asset. In most cases, you inherit it CGT-free and the date of death value becomes your cost base for future purposes. If you hold the inherited property for more than twelve months before selling, you may also be entitled to the 50 per cent CGT discount.

ATO Reference

Under Section 128-15 of the Income Tax Assessment Act 1997, where a beneficiary acquires a property from a deceased estate, the first element of their cost base is the market value of the property at the date of the deceased’s death. This market value must be established by a qualified, independent valuer to be accepted by the ATO.

Probate Valuation Versus CGT Valuation: Are They the Same Report?

In most cases, yes. Both the probate application and the CGT cost base calculation require a market value at the date of death. A single valuation report prepared as at that date satisfies both requirements.

However, there are situations where additional valuations may be needed. If the estate takes several years to be administered and the property is sold well after the date of death, the executor may also need a current market valuation to confirm the sale price is reasonable. For complex estates with multiple properties, each one requires its own report.

What Executors Need to Organise

If you are acting as executor, you do not need to have all the paperwork in order before contacting a valuer. The most important information to provide is the property address, the title reference if you have it, and the date of death. The valuer can access council records, title information, and historical sales data independently.

If there are any features of the property that significantly affect value, such as recent renovations, structural issues, or a large land component, it helps to mention these when you

make contact. A good valuer will ask the right questions and advise you on anything else they need before they begin.

Conclusion

A date of death property valuation is one of the first things to organise when managing a deceased estate. It supports the probate application, protects the executor from liability, and establishes the cost base that the beneficiary will need if they ever sell. Getting it done early removes one significant item from an already difficult process.

Managing a deceased estate and need a property valuation? We work with executors, solicitors, and beneficiaries across Australia. Reports delivered within 5 business days. Request a quote at capitalgainstaxvaluers.com.au

Frequently Asked Questions

How long after the date of death can a valuation still be done?

There is no time limit. A valuer can produce a date of death valuation even if several years have passed. They use historical sales databases and market records from that period to form a supportable opinion of value. The further back the date, the more reliant the valuer is on documented market evidence, but it is routinely done.

Do I need a separate valuation for CGT and a separate one for probate?

In most cases, a single report prepared as at the date of death satisfies both requirements. Your solicitor and accountant can both use the same document. If additional valuations are needed for other purposes, the valuer will advise you.

What if the property was rented out before the owner passed away?

The valuation methodology does not change. The valuer still assesses market value at the date of death. However, the fact that the property was income-producing may be relevant to the cost base calculation and your accountant should be informed of the rental history.

Does inheriting a property mean I pay CGT straight away?

No. Inheriting a property does not trigger a CGT event. CGT only applies when you dispose of the property, typically through a sale. At that point, the date of death valuation becomes your cost base for the calculation.

Can I use the price the property sold for at estate auction as the valuation?

If the property is sold as part of the estate administration shortly after the date of death and at arm’s length, the sale price may be acceptable to the ATO as evidence of market value. However, this is not always straightforward and your accountant should review the circumstances. A formal independent valuation is the safer approach.