Australia’s proposed Capital Gains Tax (CGT) changes from 1 July 2027 are putting a particular date on the radar of property investors: 30 June 2027.

For investors who hold an investment property at that time, determining the property’s market value could become an important part of understanding how future capital gains are treated.

But does every property investor need to pay for a formal valuation?

Not necessarily.

As Latitude Accountants CEO John Saade explains, the answer can depend heavily on how much your property has grown in value before 30 June 2027 compared with how much growth occurs afterwards.

The Australian Government has announced changes that will replace the existing 50% CGT discount with an inflation-based approach from 1 July 2027, alongside a minimum 30% tax rate on capital gains. The legislation and implementation of these reforms include specific rules for assets held across the transition date.

For property investors, this makes understanding the valuation question particularly important.

Why Is 30 June 2027 Important for Investment Property CGT?

Under the new rules, certain assets held across the transition to the new CGT regime may be treated as having a deemed disposal and reacquisition around 30 June/1 July 2027.

For affected assets, the market value at the transition date can therefore become important when determining how gains are allocated between the pre-1 July 2027 and post-1 July 2027 periods.

In simple terms, the property’s growth can be viewed in two periods:

• Growth up to 30 June 2027
• Growth from 1 July 2027 onwards

The proposed changes mean these periods can receive different tax treatment.

That is why a property’s value at the transition point may matter.

Do You Have to Get a Formal Property Valuation?

This is where things become more interesting.

The proposed rules provide an apportionment method as an alternative to establishing the market value through a formal valuation for certain assets without a readily ascertainable market value. Treasury has released draft materials covering this method.

This means an investor should not automatically assume:

“I own an investment property, so I need to pay for a valuation.”

Instead, the potential benefit of obtaining a valuation should be considered against the cost and the property’s individual growth pattern.

A formal valuation may be particularly relevant where there is a significant difference between the property’s actual growth pattern and the assumptions underlying the alternative apportionment method.

How Does the Proposed ATO Apportionment Method Work?

The proposed apportionment method is designed to determine the relevant value of an asset at the transition point without requiring a formal valuation.

For assets such as property that do not have a readily ascertainable market value, the draft method assumes a particular pattern of growth over the period of ownership.

As John Saade demonstrates in Latitude’s calculator, this can create very different outcomes depending on when the property’s growth actually occurred.

This is important because property prices do not necessarily grow evenly every year.

A property could:

• Increase rapidly shortly after purchase
• Remain flat for several years
• Experience a sudden market-driven increase
• Gain substantial value following renovations
• Benefit from new infrastructure or development nearby
• Experience most of its growth after 1 July 2027

The actual growth pattern can therefore be an important consideration.

When Could a Formal Property Valuation Be Worthwhile?

A valuation may be worth considering if your investment property has experienced significant growth before 30 June 2027.

For example, imagine you purchased a property for $1 million and it has increased substantially in value by the transition date.

If you expect relatively modest growth after 2027, establishing the property’s market value around the transition date could potentially make a meaningful difference to the allocation of the eventual capital gain.

John’s calculator illustrates this with a scenario where a property purchased for approximately $1 million rises to almost $2 million before the transition date but experiences slower growth afterwards.

In that type of scenario, the potential difference between the valuation approach and the formula can be significant.

A valuation may therefore deserve closer consideration if:

• Your property’s value has increased significantly since purchase.
• Most of the growth has occurred before 30 June 2027.
• You have completed renovations that materially increased its value.
• Comparable properties in the area have risen sharply.
• The property is in a rapidly growing suburb.
• You expect slower growth after 1 July 2027.

When Might You Not Need a Valuation?

There are also situations where paying for a valuation may not produce enough benefit to justify the cost.

Consider an investor who recently purchased an investment property and has experienced relatively little growth so far.

If most of the property’s expected capital growth occurs after 1 July 2027, the benefit of establishing a higher transition-date value may be smaller.

John’s examples show that the result can change considerably depending on the property’s future growth assumptions.

For example, if a property purchased for around $1.8 million is worth approximately $1.9 million around the transition period but is expected to increase substantially in value afterwards, paying for a formal valuation may not necessarily produce a meaningful tax advantage.

This demonstrates why there is no one-size-fits-all answer.

What If Your Property Has Had a Large Increase in Value?

This is one of the situations where investors should pay particularly close attention.

Suppose:

• You purchased the property for $1 million.
• Its value rises to approximately $2 million by 30 June 2027.
• You eventually sell it for $2.5 million.
• Most of the capital growth therefore occurred before the transition date.

Under the example discussed by John, the difference between using a formal valuation and the alternative formula could potentially be substantial.

The reason is straightforward.

If the property has already experienced most of its growth before the transition date, establishing a well-supported market value can help identify that earlier increase rather than relying entirely on an apportionment method that assumes a particular pattern of growth.

The actual tax result will depend on the final legislation and the investor’s individual circumstances.

What About Renovations?

Renovations can make the valuation question even more relevant.

An investment property may have been purchased at one value but become significantly more valuable after improvements.

For example, you may have:

• Added an extension
• Renovated the kitchen or bathrooms
• Added additional accommodation
• Improved the property’s overall condition
• Changed the property’s use or functionality

If those improvements contribute to a substantial increase in market value, obtaining appropriate evidence of the property’s value at the relevant date may be worth discussing with your accountant and an independent valuer.

It is also important to maintain records of renovation and improvement costs because these may have implications for the property’s cost base.

Is 30 June 2027 a Hard Deadline for Getting a Valuation?

It is important to distinguish between the valuation date and a deadline for physically obtaining a valuation report.

The transition rules make the value of affected assets at the end of 30 June 2027 important. However, this does not necessarily mean every investor must have a completed valuation report sitting in their hands that day.

Professional advice should be obtained on the evidence required for your particular circumstances.

A retrospective valuation may also be possible in appropriate circumstances, although obtaining contemporaneous evidence around the relevant date can provide stronger support for the property’s market value.

For investors considering a valuation, planning rather than waiting until years later can therefore be sensible.

How Much Could a Property Valuation Save You?

There is no universal dollar figure.

The potential benefit depends on factors such as:

• Original purchase price
• Property value at 30 June 2027
• Future sale price
• Timing of capital growth
• Ownership structure
• Cost base adjustments
• Applicable tax rates
• Inflation and indexation
• Cost of obtaining the valuation

A valuation might cost hundreds of dollars, but the potential tax difference could be substantially larger in some circumstances.

On the other hand, if the difference between the valuation approach and the alternative method is small, paying for a valuation may not make economic sense.

That is why modelling the potential outcomes can be useful before spending money on a valuation.

What Should Investment Property Owners Do Now?

With 30 June 2027 approaching, property investors can start preparing rather than waiting until the last minute.

Consider:

1. Review your property’s current estimated market value.
2. Review your original purchase price and cost base.
3. Keep records of renovations and capital improvements.
4. Monitor comparable property sales in your area.
5. Consider how much of your property’s growth has already occurred.
6. Model different future sale values.
7. Discuss the potential valuation approach with your accountant.
8. Consider whether an independent valuation would be worthwhile.

The purpose is not simply to obtain a valuation because there is a new tax rule.

The goal is to understand whether the valuation could produce a meaningful tax outcome for your particular property.

Frequently Asked Questions About Investment Property Valuation for CGT

Do I need to value my investment property on 30 June 2027?

Not necessarily. The appropriate approach depends on your circumstances and the final operation of the CGT legislation. Some investors may benefit from a formal valuation, while others may use the applicable apportionment method.

Why is my property’s 30 June 2027 value important?

For affected assets held across the transition, the market value at the transition point can help determine how capital growth is allocated between the pre- and post-1 July 2027 periods.

Is a property valuation better than the proposed formula?

There is no universal answer. A valuation may be more useful where significant growth occurred before 1 July 2027, while the alternative method may be more appropriate in other circumstances. The result depends on the property’s actual and expected growth pattern.

Can I get a retrospective valuation?

A retrospective valuation may be possible depending on the circumstances and the requirements applicable at the time. Investors should discuss this with a qualified independent valuer and tax professional.

Should I get a valuation if my property has barely increased in value?

Not necessarily. If there has been little pre-transition growth and you expect most of the property’s growth to occur afterwards, the potential benefit of a formal valuation may be limited. Modelling the numbers first can help determine whether the cost is justified.

Does the 2027 CGT change affect my family home?

The CGT treatment of a principal residence is different from that of an investment property because eligible main residences can qualify for the main residence exemption. The specific rules depend on your circumstances.

Talk to Latitude Accountants About Your Investment Property

The proposed 2027 CGT changes make 30 June 2027 an important date for investment property owners to understand.

However, obtaining a valuation should not be treated as an automatic requirement for every investor.

Consider the property’s growth history, expected future growth, ownership structure, cost base, and potential tax outcome.

If you own an investment property and want to understand whether a valuation could affect your CGT position, Latitude Accountants can help you assess the tax implications and plan accordingly.

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📧 info@latitudeaccountants.com.au

Disclaimer

This article provides general information only and does not constitute financial, legal, tax, property or business advice. The 2027 CGT reforms discussed are based on legislation and government materials available at the time of writing and may be subject to further amendments or implementation details. Your tax position will depend on your individual circumstances. Speak with a qualified tax professional before making decisions regarding your investment property, property valuation or CGT position.