Australian property investors who plan to hold an investment property beyond 1 July 2027 should start thinking about how they will document its value when the capital gains tax (CGT) rules change.
From 1 July 2027, cost base indexation will replace the existing 50 per cent CGT discount for affected future gains. A minimum tax rate of 30 per cent will also apply to real capital gains accrued from that date. Gains built up before 1 July 2027 will keep their existing tax treatment.
For a property held across the changeover, this creates a clear dividing line. Part of the eventual gain will relate to growth before 1 July 2027, while the remaining part will relate to growth after that date.
A formal valuation before 1 July 2027 will provide evidence of the property’s certified market value at this point. It will help the owner and their tax adviser work out how much capital growth belongs to each CGT period when the property is eventually sold.
Why Is a Property Valuation Before 1 July 2027 Important?
A property valuation before 1 July 2027 will help establish how much of an investment property’s capital growth occurred under the existing CGT system.
The reforms apply prospectively. This means gains accrued before 1 July 2027 will retain the old treatment, even where the owner sells several years later. Gains accrued from that date will fall under the new CGT rules.
A formal valuation prepared for the transition date will document the property’s market value at that point. This figure will help divide the eventual gain between the two periods.
For example, an investor could buy an established property in 2018, continue holding it after 1 July 2027 and sell it in 2030. The final calculation could include:
- Capital growth from the purchase date to 1 July 2027
- Capital growth from 1 July 2027 to the eventual sale date
- Different tax treatment for each part of the gain
| CGT period | Capital growth covered | Likely treatment |
|---|---|---|
| Purchase date to 1 July 2027 | Growth accrued before the transition date | Existing CGT treatment |
| 1 July 2027 to the sale date | Growth accrued after the transition date | New indexation and minimum tax rules |
| Entire ownership period | Total gain across both periods | Calculation is divided between the applicable rules |
The valuation itself will not trigger capital gains tax CGT. It simply records the property’s value for a future tax calculation.
It will also give the owner a clearer picture of the equity and capital growth they have built up. This information will help them compare the likely financial outcome of selling before the reforms begin against holding the property under the new CGT regime.
How Will Capital Gains Tax Change From 1 July 2027?
The Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 passed Parliament on 25 June 2026. Its core CGT changes will begin on 1 July 2027.
Under the existing CGT system, eligible individuals and trusts can generally reduce a capital gain by 50 per cent after holding an asset for at least 12 months, known as the discount method.
From 1 July 2027, cost base indexation will replace this flat discount for affected future gains. The property’s cost base will increase in line with inflation, so tax applies to the real gain above inflation rather than the full nominal gain.
A minimum tax rate of 30 per cent will also apply to real capital gains accrued from 1 July 2027. The minimum rate applies to the affected gain after indexation, not to the property’s sale price or its full nominal profit. Certain government payment recipients will be exempt from the minimum rate.
The final tax outcome will depend on several factors, including:
- The purchase price and eventual sale price
- Acquisition and selling costs, including council rates
- Capital improvement expenses
- Inflation during the ownership period
- Growth before and after 1 July 2027
- The owner’s marginal tax rate
- The total holding period
- The ownership structure, including superannuation funds and trusts
The new regime will not automatically leave every investor worse off. Treasury has stated that some investors will pay more and others will pay less, depending on inflation, investment returns and how long they hold the asset.
| Feature | Existing treatment | Treatment from 1 July 2027 |
|---|---|---|
| Main CGT method | Eligible individuals and trusts can generally apply the 50 per cent discount after 12 months | Cost base indexation applies to affected future gains |
| Inflation | The discount does not directly adjust the cost base for inflation | The cost base increases in line with inflation |
| Minimum tax rate | No specific 30 per cent minimum rate under the existing discount method | A 30 per cent minimum rate applies to affected real capital gains |
| Transition treatment | Applies to eligible gains accrued before 1 July 2027 | Applies to affected gains accrued from 1 July 2027 |
How Will a Valuation Support the New CGT System?
A property valuation before 1 July 2027 will provide a practical reference point for dividing the property’s future capital gain.
A professional valuer, often covered by professional indemnity insurance, will assess the property using market evidence available around the valuation date. The assessment will generally consider:
- Comparable property sales
- Land size and location
- Building size, age and condition
- Renovations and capital improvements
- Zoning and planning controls
- Development potential
- Local buyer demand
Market conditions at the time, including interest rate impacts and housing supply shortages
| Valuation factor | What the valuer will review |
|---|---|
| Comparable sales | Recent sales of similar properties near the valuation date |
| Land and location | Land size, position, access and local market features |
| Building details | Size, age, condition and construction characteristics |
| Improvements | Renovations, extensions and other capital works |
| Planning controls | Zoning, permitted use and development potential |
| Market conditions | Buyer demand, interest rates and housing supply |
The Australian Taxation Office expects valuations used for tax purposes to be objective and supported by appropriate evidence.
A written valuation report is a stronger record than an owner’s estimate or an unsupported online price guide. It explains the method used and shows the evidence behind the assessed market value.
Further implementation details will determine exactly how taxpayers can divide gains across the transition. Both the ATO’s default formula and a market valuation method may be used for apportionment. Investors should be cautious, as the ATO default formula may underestimate a property’s value compared to a professional valuation.
Investors should avoid assuming that every property owner must obtain a formal report before 1 July 2027. However, a professional valuation will provide useful evidence if market value forms part of the tax calculation or if the owner later needs to support their CGT position.
A time-based apportionment method will not always reflect how a property actually grew in value. A property could experience strong growth before 2027 and slower growth afterwards. Spreading the gain evenly across the full ownership period could produce a different result from using its actual market value at the transition date.
What Happens to the 50 Per Cent CGT Discount?
The existing 50 per cent CGT discount will continue to apply to eligible gains accrued before 1 July 2027.
It will not disappear retrospectively. An investor who sells after the transition date will not automatically lose the discount on all earlier capital growth. Instead, the gain will need to reflect the periods before and after the new rules began.
For a property held across 1 July 2027:
- Eligible growth accrued before the date will retain the former discount treatment.
- Growth accrued after the date will fall under indexation and the minimum tax rules.
- The usual 12-month ownership requirement will still be relevant.
- New builds will receive a choice between the 50 per cent discount and the new arrangements when sold.
Pre-20 September 1985 assets also require careful treatment. The legislation extends the new system to real gains accrued on these assets from 1 July 2027, but it does not retrospectively tax the value built up before that date.
Property owners should also keep the CGT changes separate from negative gearing grandfathering.
The negative gearing rules protect residential investment properties held before 7:30 pm AEST on 12 May 2026 (budget night). This grandfathering does not provide a blanket exemption from the new CGT treatment for growth accruing after 1 July 2027.
Should Australian Property Investors Sell Before 1 July 2027?
Some investors will want to consider selling before the new CGT system begins, but tax should not be the only factor behind the decision.
Selling before 1 July 2027 could allow an eligible investor to use the current 50 per cent discount across the full capital gain. It could also bring forward a substantial tax bill and create other costs.
Before selling, investors should weigh up:
- The property’s expected future growth
- Current rental income
- Interest and other holding costs
- Agent and conveyancing fees
- The remaining loan balance
- Renovation or development potential
- The tax payable on the sale, including capital gains tax CGT liability
- Future buying plans
- Retirement or estate planning needs
- Expected after-tax proceeds
A well-performing property could remain worth holding despite the tax changes. Selling only to preserve the existing discount could leave an investor worse off once they account for selling costs, lost rent and future capital growth.
A property valuation before 1 July 2027 will not answer the sell-or-hold question by itself. It will provide a reliable market value that the owner and their tax adviser can use when comparing different scenarios.
Smart investors will also consider small business CGT concessions if applicable, especially when planning a business sale close to the transition date.
Investors should seek advice from qualified professionals to model the tax outcomes accurately and understand the interaction with their broader financial plans.
What Records Should Property Owners Prepare?
A reliable property valuation before 1 July 2027 starts with accurate records.
Property owners should gather documents that show what they paid, what work they completed and what condition the property was in around the valuation date.
Useful records include:
- The purchase contract
- Settlement statements
- Stamp duty and conveyancing costs
- Legal and professional fees
- Renovation invoices
- Building plans and approvals
- Before-and-after photographs
- Previous valuation reports
- Property management records
- Rental history
- Depreciation schedules
- Details of extensions and structural changes
- Ownership and change-of-use dates
- Future selling expenses
| Record category | Examples | Why it matters |
|---|---|---|
| Purchase records | Purchase contract, settlement statements, stamp duty and conveyancing costs | Supports the original cost base |
| Improvement records | Renovation invoices, building plans, approvals and photographs | Supports capital improvements and property condition |
| Ownership records | Ownership dates, change-of-use dates and rental history | Helps establish relevant tax periods |
| Property reports | Previous valuations, depreciation schedules and inspection records | Provides independent evidence and historical detail |
| Sale records | Agent fees, legal costs and other selling expenses | Supports deductions included in the final CGT calculation |
Renovation records deserve particular attention. Capital improvements can affect the property’s market value and its CGT cost base. Missing invoices or unclear descriptions could make it harder to support the amount claimed later.
A tax depreciation schedule and a market valuation serve different purposes.
The depreciation schedule identifies eligible capital works and depreciating assets for annual deductions. The valuation establishes the property’s market value at a specific date. An investor could need both reports to support different parts of their tax position.
Owners should keep digital copies of their records in a secure location. Investment properties are often held for decades, and missing paperwork becomes much harder to replace after the property has been sold.
Can a Retrospective Valuation Be Completed Later?
A professional valuer can prepare a retrospective valuation after 1 July 2027.
The valuer will assess what the property was worth on the earlier date using historical evidence. This could include:
- Comparable sales around July 2027
- Archived property listings
- Historic photographs
- Renovation records
- Council and planning information
- Earlier inspection reports
- Rental records
- Evidence of the property’s condition
| Historical evidence | How it supports a retrospective valuation |
|---|---|
| Comparable sales | Shows market activity around July 2027 |
| Archived listings | Records the property’s presentation, features and asking history |
| Historic photographs | Shows the condition of the property at the relevant date |
| Renovation records | Identifies which improvements existed by the valuation date |
| Council and planning records | Confirms approvals, zoning and development controls |
| Inspection and rental records | Supports the property’s condition and use at the time |
A retrospective report must exclude changes that occurred after the valuation date. For example, an extension completed in 2029 should not increase the property’s assessed value as at 1 July 2027.
Waiting will not prevent an owner from obtaining a formal valuation, but it could make the work more involved. Photographs can disappear, renovation details can be forgotten, and older documents can become difficult to find.
Demand for valuers will also likely increase as the transition date approaches. Organising records early and arranging the report close to the relevant date will give the valuer access to more current market evidence.
Know Your Property’s Value Before the CGT Rules Change
The CGT reforms have passed Parliament, but they will not start until 1 July 2027. Property investors still have time to understand how the changes affect their assets and prepare the evidence they will need.
A property valuation before 1 July 2027 will help document the property’s certified market value at the point when the new CGT system begins. It will support future tax calculations, improve record keeping and give the owner a clearer picture of the capital growth already achieved.
Property owners should organise their purchase documents, renovation invoices, depreciation schedules and other cost base records well before the transition date. They should also speak with a qualified tax adviser about the treatment that will apply to their circumstances.
Duo Tax provides independent property valuations for tax purposes, including date-specific and retrospective reports. A clear valuation record will make the eventual CGT calculation easier to support when the property is sold.
