Australia’s CGT reforms, taking effect from 1 July 2027, could significantly change how property investors calculate tax when selling. The existing 50% CGT discount will largely be replaced by inflation-indexed cost bases and a minimum 30% tax rate on real capital gains for affected assets, while pre-reform gains retain existing treatment.
For investors, the key challenge is distinguishing capital growth before and after the transition date. A professional valuation on 1 July 2027 could help establish this split and support future CGT calculations.
While not compulsory for everyone, a reliable valuation could prove valuable, particularly for long-term investors planning to sell years down the track.
What Are the 2027 Capital Gains Tax Changes?
The Australian Government’s 2026–27 Budget reforms introduce a new approach to taxing capital gains from 1 July 2027. The legislation has been enacted, with transitional arrangements applying to assets held before the change.
Under the new rules, the existing 50% CGT discount will generally be replaced by cost base indexation for inflation, alongside a minimum 30% tax rate on real capital gains.
The key changes are summarised below.
CGT Feature
Current Rules
Generally, 50% for eligible individuals and trusts.
From 1 July 2027
Replaced by inflation-based indexation for affected assets.
Pre-reform Capital Growth
Existing CGT treatment.
Post-reform Capital Growth
50% discount may apply.
Indexation and minimum 30% tax rate apply under the new rules.
Qualifying New Residential Builds
Existing CGT discount.
Investors can choose the old or new CGT arrangements.
For property investors, the important point is that the reform does not simply apply a new tax calculation to the entire profit made when a property is eventually sold. The transitional arrangements distinguish between gains accrued before and after 1 July 2027. That distinction is where a property valuation could become valuable.
Why Is 1 July 2027 a Critical Date for Property Investors?
Under the transitional rules, an eligible asset held across 1 July 2027 is effectively divided into two periods for CGT purposes.
Capital Growth Before 1 July 2027
Capital growth before 1 July 2027 generally retains the existing CGT treatment.
Capital Growth From 1 July 2027
Capital growth from 1 July 2027 is subject to the new indexation and minimum-tax arrangements.
The legislation provides for a deemed disposal and reacquisition at the transition date, with the tax consequences deferred until the asset is actually sold. Taxpayers can generally establish the pre- and post-reform split using the property’s market value at 1 July 2027 or a prescribed apportionment method.
Example: How a 2027 Valuation Could Affect Your CGT
Consider an Australian investor who purchased an established investment property for $500,000 and later sells it for $1 million. For simplicity, assume the property is worth $800,000 on 1 July 2027, with no other cost base adjustments.
Illustrative Property Capital Growth
Original purchase price
$500,000
Pre-1 July 2027 growth: $300,000
Illustrative transition-date value
$800,000
Post-transition growth: $200,000
Eventual sale price
$1,000,000
The $300,000 pre-reform gain and $200,000 post-reform gain would be treated under different CGT arrangements, subject to the applicable rules and adjustments.
This is a simplified illustration, not a CGT calculation. Indexation, eligible costs, capital improvements, ownership structure and other factors can affect the actual taxable gain.
The example highlights why the transition-date value matters. If the property’s value is incorrectly estimated, the allocation of capital growth between the two tax regimes could also be affected.
Is a Property Valuation Mandatory Under the New CGT Rules?
No. A formal market valuation is not the only method available under the transitional arrangements. The legislation provides for a prescribed apportionment method as an alternative to using market value at the transition date. The precise application of that method and relevant administrative guidance should be checked as the ATO provides
Although a valuation isn’t mandatory, it may still be worthwhile. Property growth varies by location and individual features, so a prescribed apportionment method may not accurately reflect a property’s actual value at the transition date.
An independent valuation can provide credible evidence to help allocate capital gains between the old and new CGT rules. While it won’t automatically reduce tax, it may help support your CGT position when you eventually sell.
Why a Retrospective Property Valuation May Be More Difficult
Investors do not necessarily need to commission a valuation on 1 July 2027 itself. A retrospective valuation may be possible, provided it establishes the property’s market value at the relevant date and meets applicable requirements.
However, reconstructing a property’s value many years later can be challenging.
The Australian Property Institute (API) has highlighted the importance of reliable valuation evidence for the CGT transition. Its guidance indicates that valuation evidence prepared close to the transition date is likely to be more reliable and defensible than an assessment reconstructed years later.
Consider What Could Happen Between 2027 and the Eventual Sale:
- The property may undergo substantial renovations or redevelopment.
- The surrounding suburb may experience significant infrastructure or zoning changes.
- Comparable properties may be renovated, redeveloped or sold under very different market conditions.
- Photographs, maintenance records and other evidence of the property’s 2027 condition may no longer be available.
For a property sold in 2040, establishing its precise condition and market value in 2027 could require considerable investigation. The practical takeaway: If you intend to retain an investment property for the long term, preserving reliable evidence of its 2027 value could make your eventual CGT reporting easier.
What Type of Property Valuation Should Investors Obtain?
Not all property estimates are equal. An automated estimate from a property website or an informal real estate agent’s appraisal may provide a useful indication of market value. However, it is not necessarily a substitute for a professional valuation prepared for a tax-related purpose.
The API distinguishes professional valuation reports from desktop estimates and automated valuation models. Its guidance emphasises the importance of appropriate valuation evidence and supporting comparable sales information.
Valuation Type
Automated Property Estimate
Useful as an initial guide, but may not reflect property-specific features.
Real Estate Agent Appraisal
May help assess likely selling prices, but is not the same as an independent valuation.
Professional Retrospective Valuation
Can assess market value at a specified past date, subject to available evidence.
Professional Valuation Close to the Transition Date
Can provide contemporaneous evidence of market value and property condition.
For a potentially significant future CGT liability, speak with your accountant about the appropriate valuation method and engage a suitably qualified independent property valuer.
Retain the full report, engagement details and supporting evidence with your permanent CGT records. Your accountant can help determine how the valuation should be used under the applicable tax rules.
Does the 2027 CGT Reform Affect Your Family Home?
Most homeowners need not worry. Properties qualifying for the full main residence exemption generally remain CGT-exempt under the 2027 reforms. However, properties used partly for rental or income-producing purposes may require closer review.
You may need to seek tax advice if you:
- Convert your former home into a rental property.
- Rent out part of your home while continuing to live there.
- Own a holiday home that does not qualify for the main residence exemption.
- Have used a property partly for business purposes.
The ATO’s guidance on the property and capital gains tax rules can help homeowners understand when CGT may apply. Where a property has mixed or changing use, a valuation may be relevant to establishing the tax position.
What About New Builds and Other Property Investments?
Qualifying new builds may retain the 50% CGT discount or opt for the new rules, while eligible affordable housing has specific concessions. Separate negative gearing reforms affect certain established properties acquired after 12 May 2026. Investors should review eligibility, ownership structure and tax implications with their adviser.
What Should Property Investors Do Before 1 July 2027?
There is no need to order a transition-date valuation today. A valuation prepared now would not establish the property’s market value on 1 July 2027. Instead, investors can use the months ahead to organise their records and plan with their accountant.
- Locate the original purchase contract and settlement statement.
- Keep records of stamp duty, legal fees and eligible acquisition costs.
- Collect invoices for renovations, extensions and capital improvements.
- Retain photographs and records showing the property’s condition.
- Review ownership structure and any main residence exemption history.
- Discuss transition-date valuation requirements with your accountant.
- Arrange suitable valuation evidence close to the transition date, if appropriate.
- Store the valuation and supporting records with your permanent CGT documents.
For investors with multiple properties, early planning may be particularly useful. A portfolio of five or 10 properties can involve different acquisition dates, ownership structures, property improvements and valuation requirements.
The objective is not to obtain unnecessary reports. It is to identify which properties may benefit from valuation evidence and ensure the relevant records are available when needed.
Final Note – Why CGT Planning Matters for Long-Term Property Investors
Capital gains tax is often a long-term consideration. Investors may hold property for decades, meaning decisions made today can affect the tax outcome when the asset is eventually sold. Early tax planning and record-keeping are essential for long-term investors. A valuation confirming your property’s 1 July 2027 value could help your accountant calculate future CGT with confidence. Plan ahead, rather than waiting until you sell.
Frequently Asked Questions
Do all property investors need a valuation on 1 July 2027?
No. The transitional rules provide for market value or a prescribed apportionment method. Whether a professional valuation is worthwhile depends on the property and your circumstances.
Can I get a retrospective property valuation after 2027?
A retrospective valuation may be possible, but reliable contemporaneous evidence can be more difficult to obtain as time passes. Consider discussing the timing and valuation requirements with your accountant.
Will the 2027 CGT changes apply to my existing investment property?
The reforms distinguish between gains accrued before and after 1 July 2027. Existing investments are not automatically exempt from the new CGT arrangements on future capital growth.
Does the CGT reform affect my principal place of residence?
A property that qualifies for the full main residence exemption generally remains exempt. Properties with mixed or changing use may require closer review.
Should I get a property valuation now?
A valuation obtained now will not establish the property’s value at the 1 July 2027 transition date. Focus on organising your records and planning for appropriate valuation evidence closer to the relevant date.
Speak to Investax About Your Property CGT Strategy
The 2027 CGT reforms are a timely reminder to review your property tax strategy. Investax can help you assess the changes, review ownership structures, organise records and plan for future valuations. Early advice can help you prepare for a future property sale.
How Can We Help?
If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au or arrange a time for a meeting so we can discuss your requirements in more detail.
General Advice Warning
The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any person. Any advice contained on this page and on this website is General Advice and does not consider any person’s particular investment objectives, financial situation and particular needs.
Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.
Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.
Australian References and Sources
- Australian Treasury – Budget 2026–27 Tax System Changes. CGT reforms, transitional arrangements and new-build treatment.
- Parliament of Australia – Treasury Laws Amendment (Tax Reform No. 1) Bill 2026. Legislative summary and CGT transition provisions.
- Australian Property Institute – The CGT Changes and Property Valuations: What You Need to Know. Valuation evidence and transition-date considerations.
- Australian Taxation Office – Property and Capital Gains Tax. Property CGT, main residence exemption and relevant tax obligations.
Disclaimer: This article provides general information only and is not tax, legal or financial advice. The application of CGT rules depends on individual circumstances, ownership structure and eligibility. Investors should seek professional advice before making property or tax decisions.
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