Property valuation guidance for CGT matters
Practical, plain-language information about valuation dates, evidence, valuation products and common property circumstances.
ATO apportionment vs. an independent valuation
Depending on the circumstances, a taxpayer's position may rely on a formula-based apportionment, or on an independently established market value.
| ATO / Apportionment Approach |
|---|
| Formula or apportionment-based approach, where applicable |
| May allocate gains according to the applicable taxation methodology |
| Does not necessarily replicate actual property market movements |
| Relies on the applicable statutory or tax calculation |
| May be appropriate depending on the taxpayer's circumstances |
| Independent Market Valuation |
|---|
| Establishes market value at a specific, relevant date |
| Considers the actual property and market conditions at that date |
| Analyses relevant comparable market evidence |
| Prepared using recognised valuation methodology |
| Provides independent evidence of market value |
Here’s a simple example
Assume an investment property was purchased for $1 million, has an actual market value of $2.4 million at 1 July 2027, and is eventually sold for $3.5 million.
For illustration, assume the ATO formula produces a 1 July 2027 baseline value of $2 million.
| Scenario | ATO Formula | Full Market Valuation |
|---|---|---|
| Purchase price | $1,000,000 | $1,000,000 |
| 1 July 2027 value used | $2,000,000 | $2,400,000 |
| Phase 1 gain – before 1 July 2027 | $1,000,000 | $1,400,000 |
| Phase 1 taxable – after 50% discount | $500,000 | $700,000 |
| Sale price | $3,500,000 | $3,500,000 |
| Phase 2 gain – after 1 July 2027 | $1,500,000 | $1,100,000 |
| Less: assumed inflation indexation* | ($240,000) | ($288,000) |
| Phase 2 taxable | $1,260,000 | $812,000 |
| Total taxable profit | $1,760,000 | $1,512,000 |
That’s a $248,000 difference in taxable profit.
The property’s overall gain hasn’t changed. What changes is how much of that gain is attributed to each side of 1 July 2027.
In this example, the full market valuation establishes that more of the property’s appreciation occurred before the cut-off. That places more of the gain in Phase 1, where the existing 50% CGT discount applies, and reduces the amount falling into Phase 2.
The takeaway: if your property has experienced significant growth before 1 July 2027, establishing its actual market value at the cut-off could make a material difference to your future tax position.
*Example for illustrative purposes only. The example assumes 12% inflation indexation for the post-1 July 2027 period to demonstrate the calculation methodology used in the referenced worked example. Actual indexation, taxable gains and tax outcomes will depend on the final legislation and individual circumstances. This information is general in nature and does not constitute tax or financial advice.
Property values rarely move in a straight line
$800,000Valuation date
$1,300,000Sale
$1,500,000
Footnote: Market value at a relevant date can differ from straight-line apportionment. This chart does not determine the value of a property. Confirm CGT methodology with a qualified tax or legal adviser.
What is your property worth?
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What can, and can't, be used as evidence of market value
Not every property figure carries the same weight for CGT purposes. Here's the general distinction.
Generally acceptable evidence
- An independent valuation by a suitably qualified, registered valuer
- A valuation prepared for the specific purpose and as at the relevant date
- A valuation supported by comparable sales evidence and recognised methodology
- A valuer with no conflict of interest, acting objectively
- A written, retained report that clearly states its basis and assumptions
Generally not accepted alone
- A free automated online estimate
- A real estate agent's appraisal or opinion of likely sale price
- A council rates notice valuation (unimproved capital value)
- An insurance replacement value
- A valuation from someone with a personal or financial interest in the outcome
- An outdated valuation that doesn't reflect the relevant date
Disclaimer: This is general guidance only, based on common industry understanding. It is not a statement of current ATO policy and should be checked against applicable ATO guidance and confirmed with a qualified tax or legal adviser before reliance.
Property valuation guides
When Do I Need a Property Valuation?There isn't one single rule for when you need a property valuation for tax purposes — but there is a common thread: it comes up whenever a specific date, rather than today, determines what a property was worth. Understanding the handful of situations where this happens can save you from relying on a number that won't hold up if it's ever reviewed.Read guide 6 min read
Understanding the CGT ChangesRecent and proposed changes to how Capital Gains Tax is calculated on property have put a new level of importance on one specific figure: the market value of a property at a relevant date. Rather than relying only on a simple apportionment formula, more CGT scenarios now turn on knowing precisely what a property was worth at one specific point in time — not its value today, and not a straight-line estimate between two dates.Read guide 4 min read
ATO Apportionment vs. Market ValuationBroadly, a taxpayer's position may rely on one of two approaches: a formula or apportionment-based calculation, or an independently established market value at a specific date. The two can produce meaningfully different results — and the gap is rarely just academic.Read guide 4 min read
What Makes a Valuation Defensible?A CGT valuation should be more than a number. A defensible valuation is one that could reasonably withstand scrutiny — from the ATO, a court, or another party to a transaction — because it shows its working rather than presenting a bare figure.Read guide 4 min read
Desktop vs. Full Inspection ValuationTwo ways to establish your property's value — how they differ, and how to work out which one actually fits your situation.Read guide 4 min read
Retrospective Property ValuationsHow a valuer establishes what a property was worth at a date in the past — and why it's more involved than it sounds.Read guide 4 min read
CGT Valuations for Inherited PropertyWhat executors and beneficiaries generally need to know about establishing a property's value for a deceased estate.Read guide 4 min read
CGT Valuations for Accountants & AdvisersHow a defensible, independent property valuation supports the advice you're already giving your clients.Read guide 4 min read
Types of Property Valuation Explained: Desktop, Full Inspection, Commercial & AgribusinessEvery valuation follows the same evidence-based process — but which one you need depends on your property and your purpose. Here's what separates each type.Read guide 5 min readFrequently Asked Questions
Everything on this site is general information about property valuation and CGT considerations. It isn't personal tax advice. Please speak with a qualified tax or legal adviser about your specific circumstances.
