Private ruling: Market valuation
Date of advice: 9 October 2025
Published: 24 November 2025
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: XX XXXX 20XX

Ruling: Q1: Is the independent market valuation report you received on the date of sale of the property, reasonable in the circumstances to use for the calculation of capital proceeds? | A1: Yes. Under paragraph 5 of Taxation Determination TD 1999/67 Income tax: capital gains: if your land (including land on which your dwelling is situated) exceeds 2 hectares, can you select which 2 hectares the main residence exemption in Subdivision 118-B applies to and, if so, how do you calculate any capital gain or capital loss you make on the remainder of your land? , provides, 'the amount of the capital gain or capital loss attributable to the remainder of your land must be reasonable in the circumstances.' A market valuation report is considered a reasonable method for determining the value attributable to the property as it provides an objective basis for calculating the capital gain or loss in accordance with the determination's requirements.

Relevant facts and circumstances: Prior to 20 September 1985, Person A solely purchased the property. The size of the property is greater than 2 hectares. On XX XXXX 20XX, Person A executed their final Will and testament. The Will provided that Person A's estate (including the property) be given to Person A's children (collectively referred to as the 'Partnership') in equal shares. The Partnership included Person B. On XX XXXX 20XX, Person A passed. Pursuant to the Will, the Executors were appointed as executors and trustees of the Will. One of the executors and one of the children of Person A continued to live in the property. The Will stipulated Person A's wish for them to reside in the homestead pending a sale of the property, rent free and without charge, provided that prior to settlement of any sale they shall, at the request of Person A's Executors vacate the property. By mutual agreement with the Executors and the beneficiaries, they paid the council rates, utilities and maintained the homestead. On XX XXXX 20XX, the property was transferred to a bare trust. On XX XXXX 20XX, the Executors transferred ownership title of the property to the partners of the Partnership as tenants in common in equal shares. This was in preparation for the sale of the property. On XX XXXX 20XX, an independent valuation of the property placed the value of $XX on the homestead and surrounding 2 hectares, along with a valuation of $XX on the remaining hectares. On XX XXXX 20XX, the property was sold under a contract of sale. Clause XX of the Special Conditions to the contract of sale of the property stated: The vendor and purchaser agree that the price is allocated as follows to the homestead and surrounding curtilage of 2 ha and the balance of the property hereby sold by the vendor to the purchaser: Homestead and curtilage of 2 ha $XX Balance of farming property $XX Sale Price $XX On XX XXXX 20XX, Person B passed.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 110-25