Author: RefundOrBust(Enthusiast)Enthusiast 13 Aug 2025
Have to disagree with Mach, sorry!
When someone inherits a property, the CGT cost base is generally reset to the property’s market value at the date of the deceased’s death. This applies whether the property was the deceased’s main residence or an investment property, provided it was acquired by the deceased on or after 20 September 1985, which obvi relevant in this case.
In your scenario, the inherited cost base would be $700,000 (market value at date of death). Any future capital gain or loss will be calculated from that figure, not from the original $400,000 purchase price.
However, there are two points to be aware of:
-If the property continues to be used as a rental property, you will need to adjust the cost base for any depreciation you claim after inheriting it, this reduces the cost base and can increase the eventual capital gain.
-The reset does not erase the fact that the property is a taxable asset going forward, so when it’s sold, CGT will apply based on the increase from the $700,000 value (less costs, plus/minus any cost base adjustments).
So yes, you effectively ‘start from zero’ at $700,000, but depreciation and future improvements will still affect the final CGT calculation.
Reference: kick ass accountant
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