Capital Gains Tax Changes from 1 July 2027: What Property Owners and Advisers Need to Know About Property Valuations

Australia's Capital Gains Tax rules are changing from 1 July 2027. For property owners holding investments across the transition date, establishing the value of an asset at the relevant date may become an important part of calculating future capital gains.

The changes introduce a new approach to the taxation of capital gains and make accurate property valuation evidence particularly relevant for property owners and their professional advisers.

What is changing on 1 July 2027?

From 1 July 2027, the existing 50% Capital Gains Tax discount for individuals, trusts and partnerships will be replaced by a system based on cost-base indexation, together with a minimum tax rate of 30% on relevant real capital gains.

Importantly, the reforms apply prospectively.

Capital gains accrued before 1 July 2027 will retain access to the existing CGT discount arrangements, while gains accruing from 1 July 2027 will be subject to the new arrangements.

For property owners who continue to hold an asset across this transition, determining the value attributable to the relevant periods may therefore become an important consideration.

Why could a property valuation be important?

Property values can change considerably over time.

Where the market value of a property at a particular date is relevant to a CGT calculation, relying on an informal estimate or current selling price may not provide sufficient evidence of what the property was worth at the required date.

An independent property valuation provides a documented assessment of market value supported by appropriate property and market evidence.

For accountants and tax advisers, this can provide an independent valuation basis to use when advising clients on their taxation position.

What is a retrospective property valuation?

A retrospective property valuation determines the market value of a property at a date in the past.

Rather than applying today's property value retrospectively, a valuer researches the market conditions and comparable property transactions relevant to the required valuation date.

This may involve consideration of factors including:

• comparable sales around the relevant date
• the property's location, land and improvements
• the property's condition and characteristics
• historical market conditions
• other available property and market evidence

The resulting report provides an independent assessment of the property's market value at the specified date.

Should every property owner obtain a valuation at 1 July 2027?

Not necessarily.

Whether a valuation is required will depend on the property owner's circumstances and the application of the CGT rules.

Property owners should speak with their accountant or tax adviser about whether establishing a market value at or around 1 July 2027 is appropriate for their circumstances.

Where an independent property valuation is required, Quantum Valuation can work directly with the property owner and their adviser to establish the relevant valuation scope and date.

CGT valuations for accountants and tax advisers

Quantum Valuation works with accountants, tax advisers and their clients to provide independent property valuations for Capital Gains Tax purposes.

We can assist with current and retrospective property valuations, including matters where a historical market value needs to be established using available market evidence.

Clients deal directly with Ryan, Principal Valuer, from the initial enquiry through to completion of the valuation report.

With more than 15 years of valuation experience, Ryan provides independent, evidence-based valuation advice across Sydney and surrounding regions.

Preparing for 1 July 2027

With the new CGT arrangements commencing on 1 July 2027, accountants and property owners may wish to consider ahead of time whether valuation evidence will be required for properties held across the transition.

Establishing appropriate records and obtaining professional advice can make it considerably easier to deal with future taxation events.