If you’re planning to sell an investment property in Australia, understanding how Capital Gains Tax (CGT) works — and how property valuations play a crucial role — can save you thousands.
Whether you’re a seasoned investor, a foreign owner, or simply converting your main residence into a rental, a CGT property valuation is an essential tool for staying compliant with the ATO and optimising your tax position.
📌 What is Capital Gains Tax (CGT)?
Capital Gains Tax is the tax you pay on the profit made from selling a capital asset, like real estate, shares, or a business. In the property world, this usually refers to the difference between the price you originally paid for the property and the price you sell it for.
But here’s the catch: your “cost base” (what the ATO uses to calculate your capital gain) isn’t always just the purchase price — especially if the property was inherited, acquired before 1985, or changed its purpose (e.g. from a home to a rental). That’s where a CGT valuation comes in.
📊 When Do You Need a CGT Property Valuation?
A professional valuation may be needed in several key situations:
1. Change of Property Use
If you convert your main residence into a rental, you may trigger a CGT event. The ATO allows you to get a valuation at the time the property’s use changes to establish its market value — which becomes your new cost base.
2. Inherited Properties
When you inherit a property, the cost base for CGT purposes depends on the date of death of the previous owner. If the property was acquired before September 20, 1985, you’ll need a valuation as at the date of death to determine future CGT liability.
3. Property Acquired Before 1985
Properties bought before CGT was introduced (Sept 20, 1985) are typically exempt. But if substantial improvements were made after that date, or the property was used for income-producing purposes, a valuation might still be required.
4. Selling a Property Owned by a Trust, Company or SMSF
Entities such as SMSFs or family trusts must often submit formal valuations to satisfy ATO requirements — especially when a property is transferred between related parties or used to meet the “market value substitution rule.”
📄 What Does a CGT Valuation Involve?
A CGT valuation is a formal, retrospective assessment of the property’s fair market value at a specific date (e.g. the date you started renting it out).
Your valuation must be:
-
- Conducted by a qualified valuer or real estate professional
-
- Based on objective market data (e.g. comparable sales, location, condition)
-
- Well-documented in case the ATO ever audits your return
💡 Tip: A bank valuation or a general appraisal is not the same as a CGT valuation — the ATO requires more rigorous documentation.
✅ Why Use a Professional Valuer?
Attempting to guess the value yourself or relying on a low-cost estimate could cost you dearly if the ATO disagrees. A professional property valuer provides:
-
- A fully compliant, ATO-accepted report
-
- Defence in the event of an audit
-
- Peace of mind that you’ve maximised your tax position
💬 Final Thoughts: Get It Right the First Time
Navigating CGT can be tricky, but with the right advice and a professional valuation, you can minimise your tax liability and stay fully compliant.
Whether you’re selling, transferring, or repurposing a property, getting a CGT valuation is not just smart — it’s essential.
Need a CGT Valuation?
At Gold Coast Valuers, we provide independent, ATO-compliant CGT valuations — fast, accurate, and stress-free, our licensed valuers are here to help.
📞 Contact us today for a quote or book your CGT valuation online.
