For many Australian property investors, the value of an investment property is something they think about when buying, refinancing or selling. But with proposed changes to Australia’s Capital Gains Tax (CGT) system from 1 July 2027, establishing what a property is worth around the transition date could become an important part of tax planning.

In The CEO Breakdown, Latitude Accountants CEO John Saade discusses the potential CGT implications for property investors and highlights the importance of understanding property values before the new rules take effect.

The proposed reforms would replace the current 50% CGT discount with an inflation-based approach and introduce a 30% minimum tax rate on real capital gains from 1 July 2027. Importantly, the Government says gains accruing before 1 July 2027 will retain access to the existing 50% discount, while gains accruing after that date will be dealt with under the new system.

For investors who have owned property for years, that creates an important question: how do you establish how much of your property’s capital growth occurred before and after 1 July 2027?

Why Property Valuation Could Become Important in 2027

Under the proposed CGT changes, the tax treatment of future capital growth will depend on when that growth occurs.

The Government’s proposed system will use cost-base indexation from 1 July 2027, meaning the cost base of an asset will be adjusted for inflation so that investors are primarily taxed on real, above-inflation gains.

For property investors, this makes the transition point particularly significant.

Consider an investor who purchased an investment property many years ago. The property may have increased substantially in value by 30 June 2027 and could continue increasing in value after that date.

The investor therefore needs to understand the property’s position at the transition point rather than simply looking at:

Original purchase price → eventual sale price

The proposed rules distinguish between capital gains accruing before and after 1 July 2027. Having reliable evidence of the property’s value around the transition date could therefore become an important part of demonstrating the property’s position.

What Happens to Capital Growth Before 1 July 2027?

The proposed reforms are designed to operate prospectively.

According to the Treasury, the new CGT rules do not apply until 1 July 2027, and capital gains accrued before that date retain access to the existing 50% discount.

This is important for existing property investors.

A property purchased well before 2027 may already have accumulated significant capital growth. That historical growth is not simply treated as though it occurred after the new rules began.

Instead, the transition arrangements are intended to recognise the difference between gains accruing before and after 1 July 2027.

This is where the property’s value around the transition date could become particularly relevant.

Why 30 June 2027 Could Be a Key Date

If an investment property is worth significantly more on 30 June 2027 than when it was purchased, that value can provide an important reference point for understanding the property’s accumulated growth before the new CGT arrangements commence.

For example, imagine:

• You purchased an investment property for $600,000.
• By 30 June 2027, its market value is $900,000.
• Several years later, you sell it for $1.2 million.

There has been $600,000 of growth between the original purchase and eventual sale.

But the proposed CGT framework is concerned with when the capital gain accrued, rather than simply treating the entire $600,000 as though it occurred after 1 July 2027.

The $900,000 value around the transition period therefore provides an important reference point when considering the property’s pre- and post-2027 growth.

The exact tax treatment will depend on the final legislation and the investor’s circumstances, but the principle is clear: the property’s value at the transition point may matter.

What Evidence Can Help Establish Your Property’s Value?

A property valuation should not simply be a number pulled from an online property estimate.

Investors should consider keeping appropriate evidence supporting the property’s market value around the relevant date.

Depending on the circumstances, useful documentation may include:

• An independent property valuation
• Comparable sales information
• Recent sales of similar properties in the same area
• Property condition and improvement records
• Purchase and renovation documentation
• Existing professional valuation reports
• Relevant market evidence from the period
• Records showing changes or improvements made to the property

The appropriate evidence will depend on the circumstances and the eventual requirements of the CGT legislation.

This is why investors should discuss their situation with their accountant before deciding what valuation approach is appropriate.

Does Every Property Investor Need a Formal Valuation?

Not necessarily.

The importance and appropriate method of valuation will depend on factors such as:

• The property’s acquisition date
• The property’s expected future sale date
• The amount of capital growth
• The ownership structure
• The nature of the property
• The investor’s individual circumstances
• The final rules governing the CGT transition

For some investors, a professional valuation may provide useful evidence. For others, different forms of documentation may be appropriate.

The important point is not to assume that every investor will need the same valuation process.

Instead, get advice early enough to determine what evidence you may need.

What Should Property Investors Do Before 2027?

With the proposed changes approaching, property investors can start preparing now.

Review Your Property Records

Make sure you have records showing:

• Original purchase price
• Acquisition costs
• Capital improvements
• Relevant ownership costs
• Previous valuations
• Property-related documentation
• Loan and financing information
• Rental income and expenses

Good record keeping can make future CGT calculations significantly easier.

Review the Current Market Value

Understanding what your property is worth today gives you a useful starting point.

This does not necessarily mean arranging a formal valuation immediately. However, knowing the approximate market position of your property can help you identify which properties may require more detailed attention.

Consider the 30 June 2027 Position

For investors with substantial property portfolios or significant unrealised gains, discuss the transition date with your accountant well before 30 June 2027.

This gives you time to determine whether additional valuation evidence or other documentation may be appropriate.

Review Your Investment Strategy

Tax should not be the only reason to hold or sell a property.

Consider:

• Rental yield
• Debt levels
• Cash flow
• Expected capital growth
• Property expenses
• Investment timeframe
• Diversification
• Potential CGT consequences

A tax change does not automatically mean an investor should sell.

Should You Sell Your Property Before 1 July 2027?

The proposed CGT changes may encourage some investors to consider selling before the new rules begin.

However, this should not be treated as an automatic tax-saving strategy.

Selling property can trigger a significant CGT liability under the existing rules, along with other costs such as:

• Agent commissions
• Legal and conveyancing costs
• Loan discharge costs
• Potential refinancing consequences
• Loss of future rental income
• Loss of potential future capital growth

The better question is not simply “Should I sell before 1 July 2027?”

Instead, investors should ask:

“What is the best strategy for my overall financial and investment position?”

A property that remains financially attractive may still be worth holding despite changes to the CGT system.

How an Accountant Can Help With 2027 CGT Planning

CGT planning can become complicated when an investor owns multiple properties or holds assets through different structures.

An accountant can help you understand:

• How the proposed changes may apply to your circumstances
• The potential importance of your property’s value around the transition date
• Your existing cost-base records
• Potential CGT outcomes under different scenarios
• Whether selling, holding or restructuring warrants further consideration
• What records and documentation you should maintain

At Latitude Accountants, this approach aligns with The Latitude Way — providing proactive advice throughout the year rather than waiting until tax time.

The earlier investors understand their position, the more time they have to make informed decisions.

Frequently Asked Questions About Investment Property Valuations and the 2027 CGT Changes

Why could my investment property’s value on 30 June 2027 matter?

The proposed CGT changes distinguish between capital gains accruing before and after 1 July 2027. Establishing the property’s value around the transition date may therefore help demonstrate the property’s position at that point.

Will my existing property’s entire capital gain be subject to the new CGT rules?

No. The proposed reforms are designed to apply prospectively. Treasury states that capital gains accruing before 1 July 2027 retain access to the existing 50% discount, while gains accruing from 1 July 2027 are subject to the new inflation-based approach and minimum tax rate.

Do I need to get my property professionally valued?

Not necessarily. The appropriate approach will depend on your circumstances and the final operation of the legislation. Speak with your accountant before arranging a valuation specifically for CGT purposes.

Should I sell my investment property before 1 July 2027?

Not automatically. The CGT consequences should be considered alongside the property’s rental income, potential growth, debt, selling costs and your broader investment strategy.

When should I start preparing for the 2027 CGT changes?

It is sensible to start reviewing your property records and investment strategy well before the transition date. Waiting until you are ready to sell may leave you with fewer options for gathering useful historical evidence.

Speak With Latitude Accountants About Your Property Tax Position

The proposed 2027 CGT changes could make understanding your investment property’s value and historical capital growth more important than ever.

If you own investment property and want to understand how the changes could affect your future tax position, Latitude Accountants can help you review your circumstances and plan.

Latitude Accountants

📍 Sydney Olympic Park | Marrickville | Melbourne | Loxton
📞 1300 706 597
📧 info@latitudeaccountants.com.au

Monday to Friday: 9:00 am – 5:30 pm

Disclaimer

This article provides general information only and does not constitute financial, tax, legal or property advice. The 2027 CGT changes discussed are based on Australian Government announcements and proposed reforms and may be subject to legislative changes. The application of the rules will depend on the final legislation and each taxpayer’s circumstances. Investors should obtain professional advice from a qualified accountant or tax adviser before making property, investment or tax decisions.