Cost to you of acquiring the dwelling



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If you inherit a dwelling which the deceased acquired on or after 20 September 1985, there are rules for calculating the acquisition cost. These rules apply in calculating any capital gain or loss when a CGT event happens in relation to the dwelling.

Generally, when you inherit an asset, the first element of the asset's cost base or reduced cost base in your hands - the amount you are taken to have paid to acquire the asset - is the cost base or reduced cost base to the deceased on the date of death. The first element also includes amounts that would have been included in the cost base or reduced cost base in the hands of the trustee of the deceased's estate.

However, the first element of both cost base and reduced cost base is the market value at the date of death in either of the following circumstances:

  • The dwelling was acquired by the deceased before 20 September 1985.
  • The dwelling passes to you after 20 August 1996, it was the main residence of the deceased immediately before their death and it was not being used at that date to gain or produce income.

Note that, even though the deceased was not living in the home at the date of death, it may still be regarded as their main residence.

Last modified: 18 Sep 2009QC 18323