Capital Gains Tax Property Valuations

• Pre-CGT property (acquired before 20 Sep 1985): Generally exempt from CGT. However, substantial capital improvements you made after that date may attract CGT if they are significant enough to be treated as a separate asset.
  
  
• Post-CGT property (acquired on/after 20 Sep 1985): Subject to CGT rules. You may be eligible for CGT discounts or exemptions (e.g., main residence exemption, partial apportionments) depending on usage and holding period.

Why value? Even with a pre-CGT asset, improvements or part-use can create valuation requirements. With post-CGT assets, change of use or events like death can reset or substitute the cost base using market value—that’s when a formal retrospective valuation is essential.

1) Deceased estates (date of death)

For post-CGT assets, the beneficiary’s cost base may become the market value at the date of death. For pre-CGT assets, beneficiaries typically inherit the deceased’s cost base, but improvements and later usage may create valuation needs.
You’ll need: a formal valuation as at the date of death, a clear report naming the deceased, property details, the subject interest, and market evidence at that historic date.

2) Investment property sale (no reliable cost documentation)

Missing purchase records? Significant renovations with poor records? The ATO may accept a market value substitution where appropriate, which requires a qualified valuer’s retrospective report.

3) Change of use (home → investment—or back again)

When you first start using a main residence to produce income, the cost base for CGT can become market value at first income use. Likewise, partial use (e.g., renting a room or running a home office) can require apportionment backed by valuation evidence.

4) First used to produce income (no contemporaneous evidence)

If you lack reliable documentation at that trigger date, a back-dated valuation supports your accountant’s cost-base calculation.

5) Related-party transfers, gifts, in-specie contributions

Non-arm’s-length transactions (e.g., gifting to family, transferring into an SMSF, or trust restructures) often require market value as if transacted between knowledgeable, willing (but not anxious) parties on arm’s-length terms—that’s an independent valuation.

Bottom line: If an historic market value is required—or will materially de-risk your return—you need a formal, independent, retrospective valuation from a licensed valuer using court-recognised methods.

Different properties and scenarios call for different tools:

• Direct Comparison (Residential & Simple Commercial):
  We analyse comparable sales near the valuation date, adjust for differences (land, improvements, condition, view, parking, renovations, time).
  
  
• Capitalisation of Income (Investment Assets):
  For income-producing property, we assess market rent and capitalisation rates at the time to derive value, cross-checking against sales of similar yield profiles.
  
  
• Hypothetical Development / Residual:
  For development sites, we model feasible end values as at the historic date, deduct development and finance costs and profit to arrive at the residual land value.
  
  
• Summation / Depreciated Replacement Cost (specialised or limited sales):
  Land value + depreciated improvements, cross-checked against sales benchmarks.

All methods we use are recognised in court and industry settings, and we explain them in plain English in your report. 

1. Discovery & Scope
   Quick call to clarify purpose (CGT), property type, key dates, and whether a retrospective inspection basis or current inspection with back-dated analysis is suitable. We confirm independence and scope—and advise you if you don’t need a valuation.
   
   
2. Quote & Engagement
   We provide a written scope and fixed fee once we understand complexity (single dwelling vs. multi-asset portfolio; data availability; special scenarios). You deal directly with a senior, licensed valuer—not a call centre.
   
   
3. Inspection (where feasible)
   Site visit (or virtual/data-led basis if access is impossible) to document improvements, condition and attributes as at the relevant historic date, using plans, photos, permits and reasonable reconstruction of then-current state.
   
   
4. Research & Analysis
   Collect contemporaneous sales, rental evidence and market commentary around the valuation date; test appropriate methods; complete adjustments.
   
   
5. Report Issued
   ATO-ready PDF including valuation date, value figure(s), method, evidence table, reasoning, assumptions/limitations, photos and appendices.
   
   
6. Post-Report Support
   We answer questions from you or your accountant/solicitor and provide clarifications if the ATO queries methodology or evidence.

• Trigger & Target Date(s): e.g., date of death, first income use, acquisition, disposal.
  
  
• Ownership & Title Documents: current title search, plan, ownership interest, easements/encumbrances, strata details.
  
  
• Acquisition/Sale Contracts (if available), settlement statements, stamp duty notes.
  
  
• Renovations & Improvements: dates, scope, cost evidence, before/after photos (if available).
  
  
• Tenancy & Income Evidence: leases, rent ledgers, outgoings, vacancy history near the valuation date.
  
  
• Council / Planning Info: approvals, heritage constraints, zoning as at the historic date.
  
  
• Body Corporate/Strata Info: levies, special levies, building condition (for apartments/townhouses).
  
  
• Any prior valuations/reports (for context only).

Disclaimer: The following are simplified valuation examples only (not tax advice). Always seek advice from your accountant/financial planner/solicitor on tax law application.

A) Deceased Estate (Date-of-Death Value)

• Facts: Owner acquired an investment unit in 2002 (post-CGT). Owner passed away on 15 March 2016.
  
  
• Need: Beneficiary requires the market value as at 15 March 2016 to set their cost base for future CGT.
  
  
• We do: Back-date to March 2016. Analyse 2015–2016 sales in the building and surrounds, adjust for level/outlook/parking/condition and market movements to that date.
  
  
• Outcome: Defensible date-of-death value documented for your accountant’s cost-base calculations.
  
  

B) First Used to Produce Income (Home → Investment)

• Facts: You bought in 2008 as your main residence. Moved out and started renting on 1 July 2014.
  
  
• Need: Under “first used to produce income” rules, your cost base may reset to market value on 1 July 2014.
  
  
• We do: Establish a retrospective market value at 1 July 2014 using sales around that date and document the dwelling’s condition/renovations then, not now.
  
  
• Outcome: Accountant uses our number to calculate CGT on later sale, applying any discount/exemptions and apportionments.

C) Partial Use / Apportionment (Room Rent or Home Office)

• Facts: You rented a room from 2017–2020 and claimed deductions.
  
  
• Need: CGT on sale may require apportionment.
  
  
• We do: Provide whole-property value at relevant dates plus supporting reasoning that allows your accountant to apply time/area-based formulas.

D) Related-Party Transfer (Gift to Family / SMSF In-Specie)

• Facts: You gift an investment property to an adult child (or transfer to SMSF).
  
  
• Need: ATO expects market value as if sold at arm’s length.
  
  
• We do: Prepare a formal valuation at transfer date, using market evidence and appropriate method (income/cap rate if leased).

1. Using “free” online estimates or agent appraisals instead of a formal valuation—these aren’t independent or methodologically robust for tax purposes.
   
   
2. Wrong valuation date (e.g., valuation at settlement instead of date of death or first income use).
   
   
3. No evidence trail—no sales schedule, no adjustments, no method explanation.
   
   
4. Purpose mis-match—a bank lending valuation or generic “market appraisal” used for CGT. CGT requires a purpose-built tax valuation.
   
   
5. Ignoring improvements/condition at the historic date—today’s renovated state ≠ then-current condition.
   
   
6. No independence—self-valuations or related-party opinions carry little weight.

Pricing depends on property type, complexity, and data availability (single dwelling vs. mixed-use, development potential, multiple valuation dates). We confirm scope first, then fix the fee. Questions are free—we’re happy to advise whether a valuation is necessary before you commit.

Turnaround: Determined by access, records, and the number of properties/dates involved. We’ll outline realistic timeframes at engagement and keep your accountant or solicitor in the loop.

Deliverables:

• Formal ATO-compliant PDF report naming the client, property and valuation date(s).
  
  
• Methodology & sales schedule (with adjustments).
  
  
• Assumptions & limitations, photos, plans/title where available.
  
  
• Post-report support for your professional advisers.