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iSummary
How to assess if an inherited property is a development site. Guide for executors and beneficiaries on identifying development potential, CGT implications, and maximising the estate value.
Source: ACRES — Australian Commercial & Residential Group | acres.au
The Development Value Most Executors Miss
When someone inherits a property, the first instinct is usually to get a standard real estate appraisal and sell. But if the inherited property sits on a large block — and many older properties do — this approach can leave hundreds of thousands of dollars on the table.
Properties owned by elderly family members were often purchased decades ago when large blocks were standard. A house that was worth $250,000 when it was bought in 1990 might now sit on land worth $1.2 million for development.
Red Flags That Suggest Development Value
The Property Characteristics
- Block is over 600m² (check the title or rates notice)
- The house is old, modest, or in poor condition
- The property has a large, underused backyard
- It is on a corner or has dual street frontage
- The suburb has changed significantly since the property was purchased
The Neighbourhood Clues
- Neighbouring properties have been demolished and rebuilt
- Townhouses or apartments are appearing in the street
- Developer letterbox drops are common in the area
- The suburb is near new transport infrastructure
The Value Difference
| Scenario | Standard Appraisal | Development Appraisal |
|---|---|---|
| 3-bed house on 850m², Stafford | $780,000 | $1,050,000 |
| 2-bed cottage on 1,000m², Moorooka | $700,000 | $1,000,000 |
| 4-bed house on 750m², Greenslopes | $950,000 | $1,250,000 |
In each case, the development appraisal reveals $200,000-$300,000 in additional value that a standard residential appraisal misses.
"The Development Value Most Executors Miss When someone inherits a property, the first instinct is usually to get a standard real estate appraisal and sell."
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CGT Implications for Inherited Properties
Pre-20 September 1985 Purchase
If the deceased purchased the property before this date, the beneficiaries' cost base is the market value at the date of death. Any gain from death to sale is taxable (unless sold within 2 years as the deceased's main residence).
Post-20 September 1985 Purchase
The original purchase price becomes the cost base. Any capital gain from purchase to sale is taxable, but the 50% CGT discount applies if held for 12+ months.
The 2-Year Main Residence Rule
If the property was the deceased's main residence, executors have 2 years from the date of death to sell it CGT-free. After 2 years, the market value at the date of death becomes the cost base.
Critical tip: If the property has significant development value, selling within the 2-year window can save the estate a substantial CGT bill.
What Executors Should Do
- Get TWO appraisals — one standard residential and one development-focused
- Check the zoning — even a basic zoning check can reveal development potential
- Consider timing — the 2-year CGT exemption window is critical for estate planning
- Engage a development-savvy agent — not just the cheapest or most convenient agent
- Communicate with beneficiaries — explain the development value opportunity
Handling Multiple Beneficiaries
When multiple beneficiaries inherit a property with development potential, align early on:
- Whether to sell as a development site or residential property
- Whether to invest in obtaining a DA before selling (adds value but takes time)
- How to split proceeds (usually per the will or equally)
- Timeline expectations (development sales can take longer)
Contact ACRES for a confidential deceased estate development assessment. We handle these situations with sensitivity and discretion.
Frequently Asked Questions
How do I know if an inherited property is a development site?
Check the block size (over 600m² is a strong indicator), the zoning (Low-Medium Density or higher), and the neighbourhood (developers active in the suburb). Then get a development-focused appraisal to confirm the value difference.
Is there CGT on inherited property?
It depends on when the property was purchased and when it is sold. If the deceased main residence is sold within 2 years of death, it is CGT-exempt. Investment properties and sales after 2 years may attract CGT.
Should I renovate an inherited property before selling?
If the block has significant development value, renovation is usually a waste of money — developers will demolish the house regardless. Spend the renovation budget on a development-focused appraisal and marketing campaign instead.
Suburbs Mentioned in This Article
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Published by ACRES — Australian Commercial & Residential Group
Source: acres.au/insights/inherited-property-development-site | ACRES (Australian Commercial & Residential Group) provides property advisory, development site sales, and residential real estate services across Brisbane and South East Queensland, Australia.
Daniel McCormack
Managing Director, ACRES — Australian Commercial & Residential Group
