If the donor could have sold the property tax-free at the time of death/gifting, you as recipient will have the input value of the property adjusted upwards to the estimated market value at the time of death/gift transfer. You won't take over the period of ownership or use from the person you inherited or received the property from.

The input value of the property must be stated in connection with the statement of tax value in your tax return for the year in which you receive the property. If you submit the tax return on paper, you must state the historical input value in a separate attachment to the tax return. You must be able to document the assessment of an estimated market value at the time of death/gift transfer if you're asked to do so.

Suitable documentation could be:

• estimated value
• valuation by a valuer/estate agent
• prospectus/valuation of similar properties

If the property is subsequently sold, this input value will be used to calculate the gain unless you are covered by the rules for tax exemption as a result of your own period of ownership and use.

Example:

You've been gifted a house by your parents which they have owned and occupied for more than one of the past two years at the time of transfer. Your input value will be set to the market price at the time of transfer because your parents could have sold the property tax-free. If you sell the property in the future, this input value will be used as a basis in connection with any calculation of gain or loss.

If you sell the property without fulfilling the requirements concerning period of ownership and occupancy, any gain will be tax liable and any loss will be deductible. You must base the gain/loss calculation on the sale price reduced for the estimated sales value at the time of take-over.

If you use the property as your own home for at least one year before you sell it, you'll fulfil the requirements for period of ownership and occupancy. Gains will then be tax-free, and any losses won't be deductible