CGT on sale of inherited IP which was once PPOR

Question: How do I find out if inherited Investment Property was considered PPOR before it was turned into IP for calculating CGT on sale?

Back story: Wife inherited IP from her uncle which could have been his PPOR for 6 years before he turned it into IP in 2003. He owned properties in his name before owning this & also may have held another one in his name at same time while he lived in this one. He also held few investment properties under couple of different companies he owned, SMSFs and possibly trusts. And he lived in a house owned by one of his companies for more than 10 years and that is where he passed away.
There are no records available to us of the inherited property, any ideas on how to find relevant information for ascertaining correct cost base to calculate CGT?

 

A main residence is never "considered". Its a matter of fact. the best way if you are unsure is obtain personal tax advice.

In the facts you provide it would seem the property in question was not the deceased's own asset and also his home at the time of their death. Therefore the costbase of the property may be their original costsbase and this has trasferred. It may be necessarey to consider a title search and some work to find out what the house may have been acquired for etc. Duty may be calculated. BUT if the above facts prove correct then revaluation in 2003 may have been involved and a valuer may need to produce a 2003 valuation in place of the historical cost. This may better assist determining what the CGT reset costbase is (s118.192 ITAA97 is not optional) which may simplify matters. The executor may also need to consider access to past tax records for details of any issues that affect the costbase eg the reduced costbase. Unfortunately with poor records its possible the inheritance may come with a overstated CGT issue. since any 3rd element costs, partial exemptions, CGT choice etc improvemnets etc wont be known or available.

Using a tax adviser may give you protection for allegations of being reckless with the calculations etc

 

The relevant requirement was that it was his main residence at the DOD. If it is then the cost base would be reset to market value at death. If it wasn't then the beneficiary would inherit the cost base of the deceased.

 

I know what you are saying but in the past 6 months I encountered two taxpayers who thought they inherited a residence occupied by the deceased meaning it was subject to the market value rule. One was owned by a Disc trust (deceased was trustee which confused everyone) and the other owned by a company. I now clearly explain that the death rule requires OWNERSHIP and also OCCUPANCY (or ..occpancy absence) at the date of death as two limbs to be met. Their earlier tax advice had been wrong. (Not happy)..

 

Also the 6 year rule cannot be used if the property was income producing at the time of death.

 

Actually I should rephrase that. It could potentially be used in some instances, but the cost base wouldn't be set to the market value if it was the main residence, and the owner was absent and the property was income producing at the time of death.

 

Yes to get the market value at time of death it must be a actual residence. But if it was reset by s118.192 say 12 months earlier that may also be similiar (eg selling costs way offset any CGT profit) or the same and be a second way to access the same outcome if Dad was in a home at the time of his death AND the property was rented. If the home was vacant all should be OK as s118.192 isnt involved. Its a issue we encounter with aged care issues. Often having family occupy payng token costs of ownership gets the (NSW) land tax concession and doesnt involve tax etc

 

I suppose if the death is soon after renting it out there won't be much of a gain, but if they had bought in sydney 5.8 years ago and sold about 6 months ago the gain could result in a pretty costly tax bill.