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.
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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.
Download PDF — When Do I Need a Property Valuation? (opens in a new tab)The five most common triggers
A CGT event or legislative change
When legislation changes how a capital gain is calculated, it typically nominates a specific valuation date rather than asking taxpayers to work everything out from the original purchase price. Where a change like this applies to your property, the market value at that legislated date becomes the figure your CGT calculation is built from — not today's value, and not your original purchase price.
A former home turned into a rental (or the reverse)
This is the single most common trigger property owners run into. Under the ATO's "home first used to produce income" rule, if a property was your main residence and you later start renting it out, you may be treated as having acquired the property at its market value on the date you first used it to earn income — not what you originally paid for it. Separately, the ATO's six-year rule can let you continue treating a former home as your main residence for CGT purposes for up to six years after you move out and start renting it, provided you don't nominate another property as your main residence in the meantime. Get the interaction between these two rules wrong, and you can significantly over- or under-state your CGT position.
Inherited property
When a property passes to a beneficiary, its value at the date of death can determine the beneficiary's cost base going forward — particularly where the property was the deceased's main residence, or was acquired before CGT began on 20 September 1985. See our dedicated guide, CGT Valuations for Inherited Property, for the full detail.
A related-party transfer
Transferring property to a family member, an SMSF, a trust or another related party — including as a gift — engages the ATO's market value substitution rule. Where parties aren't dealing with each other at arm's length, or where nothing (or less than market value) changes hands, the transaction is generally treated as if it occurred at market value for CGT purposes, regardless of what was actually paid.
A retrospective requirement
Sometimes the relevant date has already passed by the time you realise a valuation is needed — a historical change of use, an old related-party transfer now under review, or an estate that's taken years to finalise. In these cases, a retrospective valuation reconstructs the property's value as at that earlier date. See our dedicated guide, Retrospective Property Valuations, for how this works.
How to tell if you actually need one
As a general rule: if a specific date — not today — determines your tax position, an independent valuation prepared for that purpose and that date is the more defensible path than an estimate or informal opinion. If you're only asking "what's my house worth right now" ahead of a sale that's happening now, a formal CGT valuation usually isn't required — your actual sale price does that job.
What "acceptable evidence" generally looks like
Not every figure carries the same weight for CGT purposes. Generally acceptable: an independent valuation from a suitably qualified valuer, prepared for the specific purpose and as at the relevant date, and supported by comparable sales evidence. Generally not accepted on its own: a free automated online estimate, a real estate agent's appraisal, a council rates notice, an insurance valuation, or any valuation from someone with a personal or financial interest in the outcome.
What happens if you skip it
Without a supportable, independently established value at the relevant date, you may need to fall back on a less precise apportionment method — essentially, drawing a straight line between two dates rather than reflecting the property's actual value at the date that matters. Because property markets rarely move in a straight line, this can work against you as easily as for you. If your position is ever reviewed and the figure you've used isn't supportable, you risk an amended assessment, interest, and potentially penalties.
Who typically needs to think about this
- •Property investors changing how a property is used
- •Executors and beneficiaries of a deceased estate
- •Families transferring property between related parties
- •SMSF trustees acquiring or disposing of property
- •Anyone advised by their accountant that a specific date applies to their situation
Guide disclaimer: General information only. This does not constitute tax advice. Whether a valuation is required, and which date applies, should be confirmed with your accountant or tax adviser.
FAQs
Not always. If a property has been used to earn income for its entire ownership period, with no related-party transfer involved, your actual purchase price and sale price are generally the relevant CGT figures. A valuation becomes important once a specific past date, not the sale date, determines your cost base, such as a change of use or an inheritance.
