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Edited version of your written advice
Authorisation Number: 1013030902185
Date of advice: 8 June 2016
Ruling
Subject: Date of death market appraisal
Question
Will a market appraisal from a real estate agent suffice as a date of death market value for the property?
Answer
Yes
This ruling applies for the following period:
Year ending 30 June 2016
The scheme commences on:
1 July 2015
Relevant facts and circumstances
The deceased passed away in 201X.
The property was the deceased's main residence from purchase.
For many reasons the property did not sell within two years of the deceased's date of death.
You have received a date of death market appraisal for the property.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 128-15 and
Income Tax Assessment Act 1997 Section 995-1(1) .
Reasons for decision
If a CGT asset was the deceased's main residence just before they died, the first element of the cost base and reduced cost base will be the market value of the asset at the time of death. This is provided that the deceased had not used the asset for producing assessable income, subsection 128-15(4) of the Income Tax Assessment Act 1997 (ITAA 1997).
Market value is defined in section 995-1(1) of the ITAA 1997 as the market value of the asset, less any input tax credits to which the taxpayer would be entitled if it had acquired the asset solely for a creditable purpose. It is also described as the best price that may reasonably be obtained for property if sold in the general market.
To determine the market value, you should use the most appropriate valuation method. Where comparable arm's length sales data is available (for example, in a market for a commodity product), this is generally considered the most appropriate method.
Valuers should be familiar with current market trends and conditions for the type of assets they are valuing. They should also refer to current market transactions to establish the basic data on which the valuation may be assessed.
In your case, you have received a post-dated market appraisal for the deceased's property. It is considered that this is sufficient for the purposes of a date of death market value in this case.