Quick answer
Australia has no inheritance tax. CGT arises only when the inherited property is later sold, and the cost base depends on when the deceased acquired it. Property acquired before 20 September 1985 resets to market value at the date of death; property acquired later carries the deceased's cost base forward. A sale within two years of death can be exempt.
Death defers the tax, it does not cancel it
Division 128 of the ITAA 1997 provides a rollover on death. No capital gain or loss arises for the deceased when the asset passes to the legal personal representative or to a beneficiary, and nothing is payable by the estate on the transfer itself.
The consequence is that the beneficiary inherits a tax position along with the property. What that position is depends entirely on the deceased’s acquisition date, which is why executors are asked for old contracts before anyone asks about current value.
The beneficiary’s cost base
This table decides whether a valuation is needed at all. It is the first thing to establish in any deceased estate matter.
How the beneficiary’s cost base is determined
The two-year rule
Section 118-195 can give a full exemption on the sale of an inherited dwelling, so that no CGT is payable at all. Broadly, it applies where the dwelling was the deceased’s main residence just before they died and was not then being used to produce income, and the beneficiary or trustee disposes of it within two years of the date of death.
Two years is measured from the date of death, and settlement inside that window is what matters in practice. Where the estate cannot achieve it — a contested will, a delayed grant of probate, a beneficiary who cannot be located — the Commissioner has a discretion to extend the period, and there is a published safe harbour setting out when an extension can be self-assessed rather than applied for. Confirm the current terms with your accountant before relying on it.
Why a valuation is commissioned early, not at sale
Where a date-of-death valuation is required, it is much cheaper and stronger to obtain it while the property is still in the condition it was in when the deceased died. Once the house is cleared, repainted, renovated for sale or demolished, the valuer is reconstructing a condition rather than observing it.
Executors frequently come to us years after the death, once a beneficiary has decided to sell. We can still prepare the report — that is ordinary retrospective work — but the evidence set is narrower and the fee is higher. If you are administering an estate now and any beneficiary may sell later, get the date-of-death figure recorded now.
- Photographs of the property as it stood at the date of death, before clearing.
- The original purchase contract, which establishes whether the asset is pre- or post-CGT.
- The grant of probate and the date of death certificate.
- Any prior valuation, including for probate or for a bank.
- Records of capital improvements made by the deceased.
Where several beneficiaries inherit shares
Each beneficiary acquires an ownership interest and each has their own cost base and their own main residence position. One sibling living in the property and another living elsewhere can end up with quite different outcomes on the same sale.
One valuation of the whole property supports every beneficiary’s position; there is no need for separate reports per share. We address the report to the estate or to the executor so that all beneficiaries and their accountants can rely on it.
Questions we are asked about this
Is there an inheritance tax in Australia?
No. Australia has no inheritance or death duties, and death itself is not a CGT event for the deceased. The tax question arises for the beneficiary when they later sell the property.
Do I need a valuation if my parents bought the house in 1975?
Yes. Because it was acquired before 20 September 1985, pre-CGT status ends on death and you are taken to have acquired it at its market value on the date of death. That figure becomes your cost base and needs to be established by a valuation.
What if we sell within two years of the death?
Where the dwelling was the deceased’s main residence just before death and was not then producing income, a disposal within two years of death can be fully exempt under s118-195 — in which case no valuation is needed. Confirm the conditions with your accountant.
The death was eight years ago. Can you still value it?
Yes. A date-of-death valuation is ordinary retrospective work and we prepare them regularly. Send whatever records exist — photographs, the original contract, rate notices — because the strength of the report and the size of the fee both depend on how well the property at that date can be described.
Keep reading
Sources
- Income Tax Assessment Act 1997 — Consolidated Act, AustLII
- Market valuation for tax purposes — Australian Taxation Office — the eight valuation fundamentals
- Australian Property Institute — Professional Practice Standards and the CPV designation
This page is general information about how valuations are used for tax purposes. It is not tax advice. Your accountant or tax agent should confirm which provision applies to your circumstances.
Written and reviewed by
Jarrad Khoury
Head of Valuations at Asset Valuations Group, where he leads the Business Valuation Services division. Over 10 years in property and business valuation. Registered Valuer in Queensland (Not Limited), Licensed Valuer in Western Australia (Not Limited), CPV through the Australian Property Institute (Not Limited), CPV and CBV through the Australian Valuers Institute, and Registered Business Valuer through the AIBB.
Last reviewed 15 September 2026 · About the practice · Editorial policy