Property owners affected by Australia’s planned capital gains tax changes have been told not to rush to obtain a valuation before 30 June 2027. The Australian Taxation Office says a valuation prepared after that date may be used retrospectively, and could provide a more reliable assessment of a property’s market value.
The changes are intended to distinguish between capital gains accruing before 1 July 2027 and those arising afterwards. However, tax will generally not become payable until the gain is realised, such as when the property is sold.
Retrospective property valuations may be acceptable
An ATO spokesman said there was no need for owners to arrange a valuation in advance. Those intending to rely on a market valuation should not obtain one now, as a prospective valuation prepared before the relevant date would not be accepted for this purpose.
Instead, a retrospective valuation can be completed later, when the property is eventually sold and the owner is preparing the tax return for that year. By then, the valuer may have access to a wider range of records and comparable sales from around 30 June 2027.
Not every affected property will necessarily require a formal valuation. Taxpayers may be able to choose between establishing the property’s market value immediately before 1 July 2027 and using an alternative apportionment method that the Government is developing.
The ATO is expected to publish further guidance, tools and calculators once the legislation and method have been settled. That guidance is also expected to explain how market values may be determined for different capital gains tax assets, which professionals taxpayers may wish to use, and what records should be retained.
Do property owners need a registered valuer?
For tax purposes, the acceptability of a valuation will generally depend on the process used and the asset being assessed, rather than simply on whether the person conducting it is registered or professionally qualified.
There are exceptions. A professional valuer is required for a market valuation used for GST margin scheme purposes, while valuations prepared by professional valuers are generally considered more credible than those produced by someone without professional valuation experience.
Using a professional does not transfer responsibility away from the taxpayer. The owner must still provide a valuation that can be replicated and defended if required.
The practical message for owners is to wait for the ATO’s detailed requirements before paying for a valuation. If one is ultimately needed, it can be prepared retrospectively for 30 June 2027 rather than commissioned years in advance.
