This post will highlight the benefits of professional valuation services in relation to the new changes to Capital Gains Tax effective 1 July 2027.
The 2026/2027 budget has unveiled the biggest changes since the introduction of capital gains tax in September 1985 and the 50% discount to Capital Gains Tax which was introduced in 1999.
What do the changes mean for property investors:
The Federal Government’s 2026-27 Budget has changed how Capital Gains Tax (CGT) works when you sell a property or other investment. The announcement was made on 12 May 2026, and the new rules apply to gains accruing from 1 July 2027.
If you already owned an investment or business property which had been purchased prior to 12 May 2026 the changes to Capital Gains Tax impact, you as follows:
- If you owned and investment or business property prior to 12 May 2026 and hold it beyond 1 July 2027, the capital gains tax applicable will be affected by two different taxation calculations.
- The 50% discount on capital gains for assets held for more than 12 months ceases on 30 June 2027 and applies only to the period held prior to this date.
- Asset held beyond 1 July 2027 will be subject to a minimum capital gains tax of 30%. The cost base as at 1 July 2027 will be indexed for inflation using the Consumer Price Index (CPI). Capital gains tax will apply only to the gain made after inflation.
What should you do to protect your interests and ensure the best taxation outcomes?
- As always, you should keep fully documented evidence with respect to expenses, income, and capital improvements and associated costs related to a property to enable accurate and detailed cost base adjustments;
- Obtain a professional valuation from Kelly and Fitzgibbon certified practising valuers around the 1 July 2027 valuation date or a retrospective valuation within reasonable proximity to the valuation date to reflect the market value of the property asset at that date. While this can also be done retrospectively years later, a valuation near the date will be more cost effective and consider the comparable sales at that time. Over time sales get renovated, demolished and extended, making comparison years later more challenging for the valuer. If you do not get a certified, in-person valuation of your property on or around 1 July 2027, The ATO requires you to use the ATO Apportionment Formula to estimate the asset’s value – which averages your total growth evenly across your entire ownership period, based on the number of days held before and after the cutoff. This may not given you the best taxation advantage in comparison to a professionally documented valuation.
- Seek specialist taxation advice to ensure you comply with ATO requirements.
The above comments are general in nature and do not constitute taxation advice. You should consult your accountant or the ATO for individual asset specific advice.