Property Valuation on 1 July 2027: The Value That Could Shape Your Future CGT

What will your investment property be worth on 1 July 2027? You may not be planning to sell it that day, but that value could become very important when you eventually sell.

That creates an important question for property investors. If your property has grown significantly before 1 July 2027, how will you prove what portion of the gain happened before the new rules started?

A property valuation at the transition date can help establish that value.

Why does 1 July 2027 matter for CGT?

Suppose you bought an investment property several years ago for $600,000. By 1 July 2027, its market value has increased to $950,000.

You then hold the property until 2031 and eventually sell it for $1.2 million.

Your total growth would be $600,000, but it did not all happen at the same time. Around $350,000 of that growth occurred before 1 July 2027, with the remaining growth occurring after that date.

The new rules are prospective. This means the CGT treatment applying to growth before 1 July 2027 is preserved, rather than the entire historical gain being moved into the new system.

The market value at the transition point can help separate those two periods. That is where a property valuation becomes important.

What happens to the 50% CGT discount?

Under the current rules, an eligible individual or trust can generally reduce a capital gain by 50% if the relevant asset has been owned for at least 12 months.

From 1 July 2027, affected future gains will instead use an inflation-based method. The cost base can be indexed for inflation, so the calculation focuses on the real gain rather than simply applying a flat 50% reduction. You can read more about how CGT applies to property on the ATO’s website.

A minimum tax rate of 30% will also apply to affected real capital gains from 1 July 2027, subject to the exceptions in the legislation.

This does not mean every investor will automatically pay more CGT. Your outcome will depend on factors such as the property’s growth, inflation, ownership period, costs, ownership structure and your broader tax position.

The important point is that the treatment changes from the transition date. For property you already own, the question is not simply, “What will my property be worth when I sell?” You also need to consider, “What was it worth when the new rules began?”

How does a 1 July 2027 valuation help?

A valuation can establish the property’s market value at the transition point.

For example, assume you purchased an investment property for $500,000 and its market value reaches $900,000 on 1 July 2027. You eventually sell it for $1.2 million.

The valuation provides evidence that the property was worth $900,000 at the transition date. This helps separate the growth that occurred before 1 July 2027 from the growth that occurred afterwards.

The valuation itself does not trigger CGT. You are not selling the property simply because you obtain a valuation. You are creating evidence that may be used later when the CGT calculation is prepared.

That distinction matters because you could hold the property for many more years after the valuation date.

Do you have to complete the valuation before 1 July 2027?

No.

The valuation report does not have to be completed before 1 July 2027. A qualified valuer can prepare a retrospective valuation after the date, using evidence that shows what the property was worth on 1 July 2027.

However, there is a practical reason to start preparing early. The closer the valuation is to the relevant date, the easier it can be to identify supporting market evidence. Comparable sales, property records, photographs and renovation information can become harder to locate as the years pass.

Think about what your property looked like several years ago. Would you still have every invoice, photograph, floor plan and record showing its condition? That is why keeping good records around the transition date matters.

What will a property valuer look at?

A professional valuation is not simply an online estimate of what your home or investment property might sell for.

The valuer can consider evidence such as:

• Comparable property sales
• The property’s location and land size
• Building size, age and condition
• Renovations and capital improvements
• Zoning and planning controls
• Development potential
• Local market conditions
• Buyer demand around the valuation date

The aim is to establish market value at a particular date.

For a tax-related valuation, supporting evidence matters. An online property estimate may give you a rough idea of value, but it is not the same as a formal valuation report prepared by a qualified professional. If the value later becomes part of a CGT calculation, you want the evidence behind that figure to be clear.

What if you rely on an online property estimate?

This is where some property owners may get caught out.

You might check an online estimate and see that your property is worth around $900,000. That can be useful for your own reference, but it does not provide the same evidence as a professional valuation.

A formal valuation can explain how the figure was reached and identify the market evidence considered. That becomes particularly relevant when the valuation date is several years in the past.

If you eventually sell the property in 2032, you may need to establish what it was worth on 1 July 2027. A casual estimate saved in an email may not provide the same level of support as a documented valuation.

Can you use an apportioning method instead?

The transition rules also provide for an alternative apportioning method under section 112-185 of the Income Tax Assessment Act 1997.

This means a property owner may not always need to rely solely on a market valuation to divide the gain between the relevant periods. The appropriate approach depends on the taxpayer and the asset.

For that reason, you should not assume that a valuation is automatically the only option, or that one method will produce the same result as another. Your tax adviser can assess which method applies to your circumstances before you make a decision.

What records should you keep before 1 July 2027?

A valuation is only one part of the record-keeping picture.

If you own an investment property, start gathering the documents that could help establish its cost base and condition. This can include:

• Your original purchase contract
• Settlement documents
• Stamp duty records
• Legal and acquisition costs
• Renovation invoices
• Building plans and approvals
• Photographs of improvements
• Previous valuation reports
• Depreciation schedules
• Rental records
• Records showing changes in the property’s use
• Records of later selling costs

Renovation records deserve particular attention. Suppose you spent $100,000 improving the property, but years later you cannot find the invoices. That could make it harder to establish the relevant costs when calculating CGT.

Keeping digital copies can save you considerable trouble later.

Should you sell your property before 1 July 2027?

This is a question many investors may ask as the new rules approach.

A property valuation can help you understand the position, but it does not tell you whether selling is the right decision.

Selling before 1 July 2027 may allow an eligible investor to apply the existing 50% CGT discount to an eligible capital gain. However, selling also creates other costs and may bring forward a significant tax liability.

You need to consider the property’s expected growth, rental income, loan balance, holding costs, selling costs, future plans and after-tax proceeds. The tax rules should form part of that decision rather than being the only reason for selling.

For some investors, continuing to hold the property may still make sense. For others, the numbers may point in a different direction. The right answer depends on your own circumstances.

What should you do before 1 July 2027?

You do not need to wait until 1 July 2027 to start preparing.

If you own an investment property that you expect to hold beyond the transition date, speak with your tax adviser about how the new CGT rules may apply to you. Our property accountants can help you understand what this means for your circumstances.

You can also start organising your purchase documents, renovation invoices, previous valuations and property records.

Then consider arranging a professional valuation with an effective date of 1 July 2027.

The important figure is not simply what your property is worth today. It is the evidence showing its market value at the point when the CGT rules change.

Years from now, when you are sitting down to calculate CGT after selling the property, that evidence could become very important. Getting organised now can make that future calculation much easier to support.

FAQs

Does a property valuation on 1 July 2027 trigger CGT?

No. A valuation records the property’s market value at a particular date. It does not mean you have sold the property or triggered a CGT event.

Do I need the valuation report completed before 1 July 2027?

No. A retrospective valuation can be prepared after 1 July 2027. However, arranging the valuation process around the transition date can make it easier to support the historical market value.

Will the 50% CGT discount disappear completely?

The existing 50% discount will continue for eligible gains accrued before 1 July 2027. Affected future gains from that date will be subject to the new inflation-based rules.

Will every property owner pay more CGT after 1 July 2027?

Not necessarily. The outcome depends on factors such as property growth, inflation, ownership period, costs and ownership structure.

Can I use an online property estimate for CGT?

An online estimate can provide an indication of value, but it is not the same as a formal valuation report. Where market value is relevant to your tax position, appropriate supporting evidence is important.

What should I do if I plan to hold my property for many more years?

Start keeping your records now and discuss the transition rules with your tax adviser. A professional valuation with an effective date of 1 July 2027 may also help document the property’s value at the transition point.

The value you record today can matter years later

You may not be thinking about selling your investment property in 2027. You may be planning to hold it for another five, ten or even twenty years.

That is exactly why the 1 July 2027 transition deserves attention.

A future CGT calculation may need to distinguish between growth that occurred before the new rules and growth that occurred afterwards. A well-supported valuation can provide evidence for that starting point.

You do not need to make a rushed decision about selling. You do need to understand how the rules affect the property you already own and keep the records that support your position.

If you are unsure how the 1 July 2027 CGT changes could affect your property, Clear Tax Accountants can help you review your position and understand what you should prepare before the transition date. From property tax advice and CGT planning to broader tax and accounting support, the team can help you assess your options based on your property and future plans.

The earlier you review your position, the more time you have to organise the right records and valuation evidence. Speak with Clear Tax Accountants for a free first consultation and start preparing for the 1 July 2027 CGT changes.