New CGT Rules 2027: Why Investment Property Owners Should Get a Valuation as at 30 June 2027
If you own an investment property in Australia, 30 June 2027 could become one of the most important dates for your future capital gains tax (CGT).
Changes to Australia's capital gains tax rules are set to affect how profits from investment properties are taxed from 1 July 2027.
For property investors who purchased their properties before this date, obtaining a professional market valuation as at 30 June 2027 could help protect their tax position when they eventually sell.
But why is this date so important, and what happens if you don't obtain a valuation?
What Are the New CGT Rules From 1 July 2027?
Under the existing rules, eligible Australian taxpayers who hold an investment property for more than 12 months can generally receive a 50% CGT discount when they sell.
The proposed changes introduce a different approach to taxing capital gains arising from 1 July 2027.
Under the announced reforms:
Capital gains accumulated before 1 July 2027 will generally retain access to the existing CGT treatment, where eligible.
Gains arising after 30 June 2027 will generally be subject to new inflation-adjusted calculations.
A minimum tax rate of 30% will generally apply to real capital gains arising after the transition date, subject to applicable exemptions and detailed rules.
This means the value of your investment property as at 30 June 2027 may become an important part of calculating your future capital gains tax.
Why Should You Get Your Investment Property Valued as at 30 June 2027?
Imagine you purchased an investment property ten years ago for $600,000.
By 30 June 2027, it is worth $1 million.
You then sell it several years later for $1.2 million.
Your total capital gain, before accounting for transaction costs and other adjustments, would be $600,000.
However, that gain was accumulated over two different tax periods.
In this simplified example, the $400,000 gain accumulated before 1 July 2027 may qualify for the existing 50% CGT discount.
The remaining $200,000 would be assessed under the new rules, including any applicable inflation adjustment.
The valuation provides evidence of how much the property was worth when the tax rules changed.
Without that evidence, investors may need to rely on an alternative calculation method, which could produce a different allocation of the capital gain.
This example is illustrative only. Actual CGT calculations depend on the final legislation, cost base adjustments, ownership circumstances and applicable exemptions.
Do You Need to Have the Valuation Completed on 30 June 2027?
Not necessarily.
The important distinction is between the valuation date and the date the valuation report is prepared.
A qualified property valuer may be able to prepare a retrospective valuation that establishes the property's market value as at 30 June 2027.
For example, a valuation report prepared in August 2027 could still assess the property's market value as at 30 June 2027.
However, obtaining a valuation close to the transition date may help ensure relevant market evidence is available and properly documented.
Is a Property Valuation Mandatory?
No. There is no blanket requirement for every Australian investment property owner to obtain a professional valuation as at 30 June 2027.
Alternative transitional calculation methods may be available.
However, a professional valuation may be particularly useful where:
Your investment property has increased substantially in value.
You have owned the property for many years.
Your property has undergone significant renovations or improvements.
You own multiple investment properties.
You are considering selling your investment property in the coming years.
An independent valuation can provide evidence to support the property's market value, although the most favourable tax outcome will depend on your circumstances.
What About Your Family Home?
Your main residence may continue to qualify for the main residence CGT exemption, provided the relevant eligibility requirements are satisfied.
However, CGT complications can arise if you have previously rented out your home, used part of it to produce income or lived elsewhere during the ownership period.
In these situations, you should obtain professional advice before assuming your property is fully exempt from capital gains tax.
What Should Investment Property Owners Do Before 1 July 2027?
If you own an investment property, now is a good time to review your records and understand how the changes could affect you.
We recommend retaining your original purchase contract, stamp duty records, legal fees, renovation expenses and other relevant property documents.
You should also consider speaking with your accountant about whether a professional valuation as at 30 June 2027 would be appropriate.
Importantly, you do not necessarily need to sell your property or make any immediate changes to your investment strategy.
The priority is ensuring you have the right information available when you eventually decide to sell.
Speak to Dolman Bateman About the 2027 CGT Changes
At Dolman Bateman, we help Australian property investors understand their capital gains tax obligations and plan for the tax implications of selling investment properties.
If you own an investment property purchased before 1 July 2027, we can help you assess whether obtaining a professional valuation as at 30 June 2027 would be beneficial.
Contact Dolman Bateman to arrange a CGT review and understand how the changes may affect your investment property.
Disclaimer: This article provides general information only and is not personal taxation advice. The proposed reforms and their application should be checked against the final legislation before making financial or property decisions.
