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Preparing for the 1 July 2027 CGT reset — valuation workflow

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Preparing for the 1 July 2027 CGT Reset: Why a Valuation Now Saves You Later

Landmark Valuations EditorialRICS-Regulated FirmUpdated 18 min read

Preparing for the 1 July 2027 CGT Reset: Why a Valuation Now Saves You Later

As announced in the 2026-27 Federal Budget (12 May 2026), from 1 July 2027 the way Australia taxes capital gains for individuals, trusts and partnerships is proposed to change. The reform package would move investment property away from the familiar 50% CGT discount towards a system based on cost‑base indexation and a 30% minimum effective tax rate on real gains.

For investment property owners and their accountants, one date sits at the centre of these reforms: 1 July 2027. The property’s value on that date is proposed to become the pivot point between the old regime and the new.

This article focuses on the workflow: when to commission your 1 July 2027 CGT valuation, what needs to be captured in the report, how to store it, and how accountants can integrate valuations into their CGT modelling. For the full service overview, see our Capital Gains Tax valuation page.

Reform status as of 27 May 2026: the CGT reform package has been announced in the 2026-27 Federal Budget but no bill has been introduced into the Australian Parliament. The reform is subject to passage of legislation and the final detail may change. This article is general information only and does not constitute tax or legal advice. Always seek advice from a registered tax agent before making decisions. We will revise this article if the legislation is introduced or amended.

1. Why 1 July 2027 Matters for CGT on Property

Under the announced framework, from 1 July 2027:

  • The 50% CGT discount for individuals and trusts is proposed to be abolished for gains accruing after that date.
  • It will be replaced with:
    • Cost‑base indexation for post‑1 July 2027 gains, and
    • A 30% minimum tax on net capital gains (after indexation).

The transitional rules do two crucial things:

  1. Preserve the 50% discount on gains that accrue up to 1 July 2027; and
  2. Treat your property’s market value at 1 July 2027 as the reset cost base for gains that accrue afterwards.

The Treasury Budget 2026-27 factsheet "Negative Gearing and Capital Gains Tax Reform" (PDF), page 3, sets out the transitional arrangements:

  • The 50% CGT discount applies to the difference between the asset's cost base and its value at 1 July 2027.
  • Indexation and the 30% minimum tax apply to the gain accruing from 1 July 2027 (using the asset's 1 July 2027 value as the reset cost base).
  • The asset's value at 1 July 2027 is determined by the taxpayer as part of the tax return in the year the asset is realised, using either:
    • A market valuation of the asset as at 1 July 2027 (Treasury's first-named option); or
    • A specified apportionment formula based on the asset's growth rate over its holding period (the ATO will provide a tool).

For property, that “value at 1 July 2027” figure is therefore not just an estimate — it’s a critical input that shapes the tax outcome many years later.

2. How the Reset Works in Practice

2.1 Splitting the gain in two

Assume:

  • You bought an investment unit in 2012 for $400,000 (including acquisition costs).
  • Its market value at 1 July 2027 is $900,000.
  • You sell it in 2030 for $1,100,000.

Under the proposed transitional rules:

  1. Pre‑1 July 2027 gain (old rules)

    • From $400,000 → $900,000 = $500,000 nominal gain.
    • You held the asset >12 months, so this portion is generally eligible for the 50% CGT discount (assuming you’re an Australian resident individual or an eligible trust).
    • Discounted gain included in your assessable income: $250,000.

  2. Post‑1 July 2027 gain (new rules)

    • From $900,000 → $1,100,000 = $200,000 nominal gain.
    • The $900,000 becomes your reset cost base.
    • This $200,000 gain is:
      • Adjusted for inflation (CPI indexation) over 2027–2030, and
      • Subject to the 30% minimum tax on the resulting net capital gain.

The higher the 1 July 2027 value, the more of your total gain falls into the pre‑2027, 50%‑discounted bucket.

Try this with your own numbers: the interactive CGT calculator lets you plug in your purchase price, sale projection, and a proposed 1 July 2027 value, then shows the tax differential between the two apportionment methods side by side — the same scenario walked through above, made live. If your property is regional, structurally improved, or part of a multi-asset portfolio, the related piece Where the apportionment formula leaves investors exposed covers the under-discussed scenarios where the Treasury formula systematically understates pre-2027 gain.

2.2 Why the valuation is so influential

Now imagine a different scenario where the ATO apportionment formula estimates the 1 July 2027 value at only $820,000 instead of $900,000.

  • Pre‑2027 gain: $400,000 → $820,000 = $420,000 (discountable).
  • Post‑2027 gain: $820,000 → $1,100,000 = $280,000 (indexed + minimum tax).

Compared with a defensible market valuation at $900,000, the formula:

  • Shifts $80,000 of gain from the discountable pre‑2027 period into the post‑2027 period,
  • Potentially exposing it to higher effective tax due to the 30% minimum rate.

At a 37% marginal tax rate today, that mis‑allocation could easily translate into tens of thousands of dollars in extra tax over the life of the investment.

3. Why Commission a 1 July 2027 CGT Valuation?

You are not forced to obtain a professional valuation. In many cases, the ATO formula may be acceptable. But for investment property, there are four strong reasons to consider a formal 1 July 2027 CGT valuation.

3.1 Evidence of cost base — and less room for dispute

The ATO’s existing guidance on market valuation for tax purposes (QC 26358) emphasises:

  • Market value is the price between a willing but not anxious buyer and a willing but not anxious seller in an arm’s‑length transaction.
  • Appropriate evidence includes:
    • Independent professional valuations,
    • Comparable sales data,
    • Income‑capitalisation analyses, and other recognised valuation methods.

A professional valuation report prepared close to 1 July 2027 by an API or RICS‑regulated valuer:

  • Provides contemporaneous evidence of the market value at the transition date.
  • Records the assumptions and methodology used, making it more defensible in any later review.
  • Reduces the scope for the ATO to argue that the 1 July 2027 value was overstated.

By contrast, a purely formula‑based value may be easier for the ATO to challenge if it appears inconsistent with local market conditions at the time.

3.2 Potentially maximising the 50% discount portion

The ATO formula will be designed for simplicity, not precision. It is likely to assume some form of smoothed growth profile across the life of the asset.

That may not reflect reality for many properties, for example:

  • Early‑stage growth: Properties that saw most of their price appreciation in the years to 2025–2027 (e.g. gentrifying suburbs, post‑infrastructure uplift).
  • Refurbishment or development: Properties that underwent significant improvements before 1 July 2027, which a generic formula may under‑recognise.

In these cases, a well‑evidenced market valuation can:

  • Attribute more of the total gain to the pre‑2027 period,
  • Increase the discounted gain, and
  • Reduce the slice of the gain taxed under the new regime.

The aim is not to inflate value artificially, but to ensure the reset value accurately reflects reality.

3.3 Avoiding reconstruction years down the track

One of the most common misconceptions we see is:

“If the ATO ever asks, I’ll just get a valuation done then.”

The problem: you cannot re‑run the 2027 market. Valuing a property retrospectively is possible, but:

  • Data and evidence are harder to piece together years later.
  • The valuer may not have access to the same level of contemporaneous market intelligence.
  • The ATO may view the valuation as less robust because it was not done at or near the valuation date.

By contrast, a contemporaneous valuation done at (or very near) 1 July 2027:

  • Uses live sales evidence and current inspection.
  • Provides a clear audit trail for both methodology and market conditions.
  • Is far more likely to stand up if challenged.

3.4 Integrating valuation into CGT strategy

A solid estimate of your likely 1 July 2027 value — and then a final formal valuation — is essential to:

  • Model the CGT outcome if you:
    • Sell before 1 July 2027 under the existing rules; or
    • Hold through the transition and sell later under the hybrid system.
  • Plan around:
    • Retirement timing,
    • Debt reduction,
    • Portfolio rebalancing (e.g. selling secondary assets, holding blue‑chip).

Your accountant can plug valuation figures into CGT models to compare after‑tax results across scenarios. Without that 1 July 2027 number, the exercise is guesswork.

For context on how the rules themselves are expected to change, see our Capital Gains Tax valuation page.

4. When to Commission Your 1 July 2027 CGT Valuation

4.1 Working backwards from the deadline

The valuation date specified in the Treasury factsheet is 1 July 2027. (Final legislation may refine the precise transitional cut-off; this article will be revised when a bill is introduced.)

However, you do not need to wait until that exact day to start the process. A practical timeline:

  • Mid‑2026 to early‑2027

    • Inventory your portfolio with your accountant.
    • Identify properties where a 1 July 2027 CGT valuation is likely to be worthwhile:
      • High unrealised gains,
      • Long holding periods,
      • Non‑standard assets (mixed‑use, development sites, unusual locations),
      • Properties likely to be sold in the next 5–10 years.
    • Begin CGT modelling under different scenarios to see where valuation precision makes the most difference.

  • Q2 2027 (April–June)

    • Instruct your chosen valuer(s) and secure booking times around late June / early July.
    • Expect capacity constraints: many investors will be chasing the same deadline.

  • Late June – July 2027

    • Valuer inspects the property and completes a report as at 1 July 2027 (or as close as physically possible).
    • If the inspection must occur slightly before or after that date, the valuer can apply market evidence and reasoning to express a value at the valuation date.

The earlier you organise the engagement, the less you are exposed to bottlenecks and rushed work.

4.2 Pre‑1985 (pre‑CGT) properties — treatment under the reform

The Treasury Budget factsheet does not explicitly address how pre-CGT assets (acquired before 20 September 1985) will be treated under the 2027 reform. The existing pre-CGT exemption is a long-standing feature of the CGT regime and has not been identified in the announced reform package as in scope for change.

Until the legislation is introduced and the explanatory memorandum clarifies the position, holders of pre-1985 properties should treat this as an open question and verify the proposed treatment with their tax adviser before commissioning a 1 July 2027 valuation specifically on pre-CGT grounds. If the legislative draft confirms that pre-CGT assets are brought into the new regime, a contemporaneous market valuation as at 1 July 2027 would become important as the first defensible cost-base anchor. If the existing exemption is preserved unchanged, the valuation is not required for those assets.

Our position on this and other under-discussed scenarios is in the companion piece: Where the apportionment formula leaves investors exposed.

5. What a Robust 1 July 2027 CGT Valuation Should Include

A valuation prepared for CGT purposes should do more than state a single number.

While requirements will vary, a defensible report by an API or RICS valuer typically includes:

5.1 Clear valuation purpose and basis

  • Purpose: “Valuation of [property] as at 1 July 2027 for the purpose of determining cost base for capital gains tax calculations.”
  • Basis of value: Market value, defined consistently with ATO and professional standards (e.g. the price between willing but not anxious parties in an arm’s‑length transaction).

5.2 Property details and tenure

  • Full legal description (lot/plan, title reference).
  • Address and land area.
  • Zoning, planning overlays and any restrictions.
  • Tenancy details:
    • Lease terms,
    • Rents,
    • Outgoings,
    • Vacancy, incentives.

This information can be important in supporting the selected valuation approach.

5.3 Methodology and assumptions

The valuer should explain:

  • Which approach(es) were used:
    • Comparable sales analysis (most common for residential),
    • Capitalisation of income (for leased commercial),
    • Discounted cash flow for complex investments,
      and why.
  • Key assumptions:
    • Market rent levels,
    • Capitalisation rates or discount rates,
    • Structural condition and improvements.

For CGT, a clear rationale helps your accountant and, if necessary, the ATO understand how the valuation was derived.

5.4 Supporting market evidence

A well‑prepared report will typically attach or reference:

  • Recent comparable sales (ideally bracketing the valuation date).
  • Market commentary — especially if conditions were volatile around June–July 2027.

This evidence is the backbone of the valuation’s defensibility.

5.5 Compliance with professional standards

Landmark Valuations operates under the RICS Red Book (RICS Valuation – Global Standards), which aligns with international best practice and is widely recognised by regulators, lenders and institutional owners.

Whether your valuer follows RICS, API or both sets of standards, look for:

  • Confirmation that the report complies with relevant professional standards.
  • Disclosure of any conflicts of interest.
  • The valuer’s qualifications, firm, and professional memberships.

For an overview of how Landmark approaches tax‑related work, see our Capital Gains Tax Valuation page.

6. Record‑Keeping: How Long to Keep the Valuation and Where

Under existing CGT record‑keeping rules (e.g. s.121‑20 of the ITAA 1997), you must retain records relevant to a capital gain or loss for at least five years after the CGT event (usually the sale).

However, because:

  • The 1 July 2027 valuation will be used many years later when you eventually sell, and
  • The property may be held through multiple ownership and structuring changes,

a more conservative, practical approach is:

  • Keep the original valuation report indefinitely while you still own the property.
  • If the property is transferred (e.g. into a family trust or between related parties), ensure the valuation is passed along and referenced in any tax advice.

In practical terms:

  • Maintain secure digital copies of the full report and any supporting documents (photos, plans).
  • Log the report in your property file with:
    • Acquisition documents (contract, settlement statement),
    • Improvement records (capital works, major repairs),
    • Lease and income records.

Accountants can help by:

  • Storing copies in the client’s permanent file.
  • Clearly tagging it in their systems as “1 July 2027 CGT valuation – cost base reset”.

7. How Accountants Can Integrate 1 July 2027 Valuations into Their Workflow

For accountants with significant property investor client bases, the next 12–18 months are about organisation rather than scramble.

7.1 Triage your client portfolio

Use existing CGT and depreciation schedules to identify:

  • Clients with multiple investment properties.
  • Properties already in clients' hands (the 2027 cost-base reset would apply to existing assets at the reset date — exact grandfathering / new-acquisition treatment will be clarified when the legislation is introduced).
  • Pre‑1985 properties (treatment under the reform not yet clarified — see 4.2 above).
  • Assets with large unrealised gains or complex histories (partial main residence, periods of vacancy, substantial renovations).

Flag which of these are likely to be held beyond 1 July 2027.

7.2 Build CGT comparison models

Develop standard templates that can incorporate:

  • Scenario A: Sale before 1 July 2027 under current discount rules.
  • Scenario B: Hold, with:
    • 1 July 2027 reset value (from a provisional estimated valuation),
    • Different CPI and growth assumptions,
    • Application of the 30% minimum tax.

Once actual 1 July 2027 valuations are available, the models can be updated quickly.

7.3 Establish relationships with specialist valuers

Not all valuations are equal from a CGT perspective. For best results, look for valuers who:

  • Understand CGT and ATO valuation expectations.
  • Are regulated by a recognised professional body (RICS or API).
  • Have experience in:
    • Investment‑grade residential and commercial property,
    • Development and mixed‑use assets where income and highest and best use are more complex.

Having a trusted valuation partner lets you:

  • Standardise instructions (“CGT cost‑base reset as at 1 July 2027”).
  • Obtain consistent report formats you can easily interpret and work with.

Landmark Valuations regularly works alongside accountants and tax advisers on CGT matters; more detail is on our Capital Gains Tax Valuation page.

8. Common Misconceptions to Address with Clients

8.1 “The reset makes everything before 2027 tax‑free”

No. Pre‑2027 gains are still taxable when you eventually sell. The reforms simply preserve the 50% discount for those gains for eligible taxpayers.

8.2 “I can choose whichever regime gives me less tax”

Also no. You cannot apply the new rules to pre‑2027 gains or vice versa. The split is time‑based:

  • Pre‑1 July 2027: Old rules (discount).
  • Post‑1 July 2027: New rules (indexation + minimum tax).

Your real choices are:

  • Sell before or after 1 July 2027; and
  • Use a professional valuation or rely on the ATO formula.

8.3 “Bank valuations or online estimates are sufficient”

Generally risky for CGT.

  • Lender “valuations” are often internal assessments for credit purposes, not formal market valuations, and may not be available as full reports.
  • Online estimates (AVMs) are not prepared or signed off by a valuer and typically won’t satisfy the ATO as primary evidence in a dispute.

For significant assets, a formal valuation report prepared by a qualified valuer is the most defensible position.

9. Next Steps for Property Investors

If you own or advise on Australian investment property likely to be held past 1 July 2027, the practical steps over the coming year are:

  1. Map your portfolio

    • List each property, acquisition cost, estimated current market value, and expected holding period.

  2. Discuss CGT scenarios with your accountant

    • Compare selling before 1 July 2027 versus holding.
    • Identify the properties where the 1 July 2027 CGT valuation will likely have the biggest tax impact.

  3. Plan your valuation work

    • Decide which properties warrant a formal 1 July 2027 valuation.
    • Book valuer capacity ahead of time to avoid the mid‑2027 bottleneck.

  4. Set up your record‑keeping

    • Organise a central digital file for each property, including the eventual valuation.
    • Ensure your accountant has copies and understands how the valuation will feed into future CGT calculations.

  5. Stay informed as the law progresses

    • The reforms are still subject to legislative process and may evolve.
    • Monitor Treasury and ATO updates and revisit your strategy with your adviser if key parameters change.

Conclusion and Call to Action

The 1 July 2027 CGT reset is, in effect, a once‑off re‑baseline of your investment property’s tax cost base. The quality of the 1 July 2027 CGT valuation you rely on will influence how much of your eventual capital gain is taxed under the current 50% discount, and how much falls under the new indexation and minimum tax regime.

For many investors, relying on a generic formula carries unnecessary risk — especially where the property is high‑value, unique, has a long history or substantial improvements, or is held in a complex structure.

A carefully prepared, contemporaneous valuation by a RICS‑regulated firm like Landmark provides:

  • A defensible 1 July 2027 cost base,
  • Better inputs for long‑term CGT planning,
  • Reduced audit exposure.

If you’d like to discuss how and when to arrange 1 July 2027 valuations for your properties or your clients’ portfolios, you can request a confidential, obligation‑free proposal via our online form: Request a valuation quote.

Sources:

As of 27 May 2026, no bill has been introduced to the Australian Parliament for this reform; the changes are subject to passage of legislation. The Treasury Budget factsheet of 12 May 2026 is the most current public-facing detail on the package; some scenarios (pre-CGT assets, exact grandfathering of recent acquisitions) are not addressed in the factsheet and remain open until the legislative draft is published. This article will be revised when the bill is introduced and when amendments are finalised.

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