2027 CGT changes: How property investors can prepare
From 1 July next year, the 50% capital gains tax (CGT) discount that's been in place for over a quarter of a century will largely come to an end.
It will be replaced by a system of indexation, with a minimum tax rate of 30% applying to real capital gains.
As the table below shows, the CGT reforms announced in the Federal Budget only apply to gains made after 1 July 2027.
Gains made before 1 July 2027 will continue to benefit from the 50% CGT discount.
| Timing of gains | Tax treatment under the new rules |
| Before 1 July 2027 | The existing 50% CGT discount applies if the asset has been owned for at least 12 months. |
| After 1 July 2027 | The cost of the investment is adjusted for inflation (using CPI figures). A minimum 30% tax rate will apply to the 'real' (after-inflation) capital gain. Investors in eligible new-build properties can choose between the 50% CGT discount and the new rules. |
The need for a 'cost base' as at 1 July 2027
When the CGT system switches over on 1 July 2027, you'll need a 'cost base' for investments you already own.
The value you use matters. The higher the value, the lower the gain that falls under the new rules and the less tax you may pay.
But as with all things tax-related, the Australian Taxation Office (ATO) likes to see credible proof of how you arrived at a cost base figure.
Property - it deserves special care
One area that deserves special care is real estate - this includes residential property, commercial property, holiday homes and vacant land.
Property is an unlisted asset - and as few properties are truly identical, it can be challenging to find an accurate value at a given point in time.
In addition, property is a high-value investment. A small difference in the value applied at 1 July 2027 can make a big difference to your future CGT bill.
How will you prove what your property was worth on 1 July?
As it stands, investors can choose between two ways to value their property.
Option 1: Government valuation formula
Treasury has proposed a do-it-yourself valuation formula.
With this method, you don't need to take any action now. You can wait until the property is sold at some future date.
When you sell, you would use the nine-step formula, working backwards from the eventual sale price to reach a value as at 1 July 2027 using a constant compounding growth rate.
Not only is the formula complex, it assumes that property values grow at an even pace over time, which rarely happens in the real world. Renovations, neighbourhood gentrification and local infrastructure developments can all drive a rapid hike in a property's value.
The upshot is that the formula may not provide a truly accurate value for your property.
Option 2: a professional valuation
The other option is to have your property professionally valued.
A formal valuation doesn't have to be completed on 1 July 2027. Retrospective valuations are possible though they're not ideal. Records can be lost, markets can change or you may complete improvements on the place.
That's why it can be a good idea to have a valuation completed close to mid-2027 even if you have no immediate plans to sell.
The Australian Property Institute adds that a valuation made close to 1 July 2027 is more reliable, credible and defensible than a retrospective valuation prepared years after the event.
But there's a catch.
Around 2.3 million Australians own at least one investment property. On top of that, there are around 250,000 commercial and agribusiness investment properties.
Chances are, a lot of these investors will want a valuation conducted around mid-2027.
The thing is, there are relatively few valuers, with only around 5,000 API-accredited valuers nationally. Some work for big firms like Herron Todd White, CBRE, Acumentis and Opteon. Others are employed by smaller, independent firms.
Whatever the case, soaring demand could see valuers booked out long before July next year. Acumentis, for example, is already taking bookings for mid-2027.
This can make it worth booking your valuation now if this is the path you choose to take.
Yes, a formal valuation will cost you.
Valuations for CGT purposes can cost between $700 and $1,400, depending on the nature and location of the property and the valuer you select (do shop around). The cost can jump by as much as 50% if a valuation is needed urgently - within one or two days.
Either way, with demand likely to outstrip the supply of valuers, the cost of valuations could climb higher.
Despite this, a formal valuation can more than pay for itself.
In one scenario modelled by Herron Todd White, using a professional valuation rather than the formula resulted in $248,000 less taxable profit.
The fine print
The ATO warns that "valuations undertaken by professional valuers are more credible than those provided by someone who isn't a professional valuer."
In other words, a value provided by your local real estate agent or a free online estimate is unlikely to be enough if the ATO questions your figure.
A few carve-outs on the new 30% minimum CGT rate
Bear in mind, investors who purchase an eligible new-build property can still use the 50% CGT discount after 1 July 2027.
Also, the 30% minimum tax rate won't apply to certain income-support recipients, including Age Pension recipients. Instead, they'll pay CGT at their personal marginal rate.
It may be a long shot, but if you're close to qualifying for Centrelink income support, it could be worth holding off on a sale.
The bottom line - the time to prepare is now
As we roll towards the end of the year, it can be easy to put off preparing for the new CGT regime.
By taking action today, investors have time to talk things over with their tax adviser, financial planner and professional property valuer - and develop a roadmap for the changes.
If you're looking for a valuer, check out the Australian Property Institute's online database.
How to value other investments for 1 July 2027
For many investments, you'll need a market value as at 1 July 2027 (classic cars, for example, are typically exempt from CGT).
Here's a quick guide to how different assets can be valued.
| Investment | How to value as at 1 July 2027 |
| Listed investments - shares and ETFs | Use the closing price listed on the Australian Securities Exchange (ASX). |
| Unlisted managed funds | Your fund manager should provide the official unit price (or NAV per unit) for that date. |
| Cryptocurrencies such as Bitcoin | Use the market price as at 1 July 2027. |
| Collectables - such as artworks, jewellery or antiques that cost more than $500 | You may need a 'defensible' asset value provided by experts in the field or your own well-documented research. |
Frequently Asked Questions about this Article…
From 1 July 2027 the 50% capital gains tax (CGT) discount for assets owned 12 months or more will largely be replaced by an indexation system that adjusts your cost base for inflation and applies a minimum 30% tax rate to real (after‑inflation) capital gains. Gains made before 1 July 2027 will still qualify for the existing 50% discount. Property investors need to plan because the new rules change how gains are calculated and may increase tax on future sales.
The cost base at 1 July 2027 is the value used to calculate future capital gains under the new indexation rules. A higher cost base reduces the gain that falls under the new regime and can lower your CGT bill. The Australian Taxation Office expects credible evidence for the cost base, so how you value assets at that date matters a lot—especially for high‑value assets like property.
You can choose between the government’s proposed valuation formula (a nine‑step, backward calculation from the eventual sale price using constant compounding) or a professional valuation by an accredited valuer. The formula is complex and assumes steady growth, which may not reflect real market changes. A professional valuation is more credible to the ATO and is recommended to defend your cost base.
Yes, it’s wise to consider booking early. There are only about 5,000 Australian Property Institute (API)‑accredited valuers nationwide and millions of investment properties, so demand will be high. Some firms (for example Acumentis) are already taking mid‑2027 bookings. Valuations done close to 1 July 2027 are more reliable and defendable than retrospective reports.
Valuations for CGT purposes usually range from about $700 to $1,400 depending on the property and valuer. Urgent valuations (within one or two days) can cost around 50% more, and prices could rise if demand outstrips the supply of valuers.
Yes. Investors who buy eligible new‑build properties can choose to keep the 50% CGT discount after 1 July 2027. Also, certain income‑support recipients (for example Age Pension recipients) are not subject to the 30% minimum rate and will instead pay CGT at their personal marginal tax rates. The article suggests it may be worth discussing timing of sales with advisers if you're close to qualifying for Centrelink support.
For listed shares and ETFs use the ASX closing price on 1 July 2027. For unlisted managed funds use the official unit price or NAV published by your fund manager for that date. For cryptocurrencies like Bitcoin use the market price on 1 July 2027. Collectables (artwork, jewellery, antiques over $500) may need a defensible expert valuation or well‑documented research to support the value.
Yes — professional valuations tend to be more credible to the ATO than agent estimates or free online tools. The article cites a modelling example from Herron Todd White where using a professional valuation rather than the government formula resulted in $248,000 less taxable profit in that scenario. A formal valuation can therefore more than pay for itself in tax savings in some cases.
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