Property investors encouraged to consider professional valuations ahead of capital gains tax changes

RICS Australia is encouraging property investors and their tax advisers to consider obtaining independent professional valuations, as Australia prepares for significant changes to the capital gains tax regime from 1 July 2027.

Under reforms passed by Parliament, the existing 50% capital gains tax discount will be replaced by a minimum 30% tax rate on capital gains accruing from 1 July 2027. Importantly, gains accrued before that date will continue to be treated under the existing arrangements.

For owners of investment property held across the transition date, establishing a reliable market value may therefore become an important part of demonstrating the value attributable to the period before and after the new regime commences.

RICS is encouraging investors to speak with their accountant or tax adviser well ahead of 30 June 2027 about whether a valuation will be appropriate for their circumstances and, where a valuation is obtained, to consider using an appropriately qualified independent professional valuer.

Vishant Narayan FRICS, RICS Australasian Board Member:

"An online estimate, a real estate agent appraisal and a professional valuation are three fundamentally different things, prepared for different purposes, and that difference matters more than ever as the CGT rules change.

"A professional valuation is much more than a number. A qualified valuer considers the property, relevant market, comparable evidence and appropriate valuation methodology before reaching an independent opinion of market value.

"For any investor holding property across the transition date, that independence is what turns a guess into evidence – a clear, well-supported record of market value at a specific point in time, capable of standing up to review by the ATO."

RICS is recommending that investors consider the qualifications, experience, independence and professional obligations of anyone engaged to provide a valuation.

RICS Registered Valuers are required to comply with RICS Valuation – Global Standards (Red Book Global Standards) and are subject to the RICS Valuer Registration Scheme, which represent the highest national and international valuation standards, incorporating the International Valuation Standards and establishing requirements relating to ethics, competency, objectivity, disclosures, competence, terms of engagement, investigation, valuation methodology, reporting, specific additional requirements for valuation of real property interests and professional conduct.

Narayan also said:

"Independent valuations are important not only for individual taxpayers, but also for confidence in the broader financial and taxation systems.

"Independent professional valuations underpin taxation, lending, financial reporting and investment decisions throughout the economy. Maintaining high standards of valuation practice is therefore ultimately a matter of public interest."

RICS recommends that property investors:

• speak with their accountant or tax adviser about how the CGT reforms may affect their individual circumstances
• consider engaging an RICS chartered valuation surveyor
• ensure the valuer is clearly instructed as to the purpose of the valuation and the relevant valuation date, and
• retain the valuation report and supporting documentation with their records.