A retrospective valuation assesses a property's market value at a specified date in the past. It can provide evidence for a CGT calculation where the tax rules require market value. Your tax adviser should first confirm whether a valuation is needed and the relevant date.
What the evidence needs to show
A useful report identifies the property, valuation date, purpose, assumptions, comparable sales and reasoning. The ATO generally assesses the valuation process and supporting evidence. It does not require an independent professional valuation in every CGT situation. Engaging a qualified valuer does not transfer the taxpayer's responsibility for supporting their tax position.
When a past market value may matter
- A home becomes a rental. The home first used to produce income rule can reset the cost base to market value when its conditions are satisfied. Renting out a home does not automatically produce that result in every case.
- A family transfer. Market value substitution rules may apply to gifts or dealings that are not at arm's length. Exemptions and rollovers depend on the circumstances.
- An inherited property. The cost base may depend on the deceased's acquisition date, use of the property and other conditions. It is not always the value at death.
- A change of tax residency. Moving overseas requires tax advice. Australian real property is generally taxable Australian property; departure does not automatically reset its cost base.
Reconstructing the property at the relevant date
Historical sales must be considered alongside the property's condition at the time. Dated photographs, floorplans, renovation invoices, council records, rental histories and earlier reports can help establish what existed then. A later inspection cannot by itself show the earlier condition.
Where evidence is limited, the report should explain the assumptions and limitations. Keep the material used to support the assessment.
Getting the instructions right
Send the address, your adviser's instructions, the required date and available historical records. A valuation provides evidence of value; the accountant determines the cost base and tax treatment. A disputed valuation can change a tax calculation in either direction, so well-supported evidence matters.
Vanguard Valuations prepares retrospective CGT valuations across NSW, ACT and VIC. Get in touch to confirm scope, fee and timing.
More from Vanguard Valuations
Sources and further reading
- ATO: market valuation for tax purposes
- ATO: treating a former home as your main residence
- ATO: cost base of inherited assets
General information only. Obtain advice about your circumstances from your accountant, solicitor or other appropriately qualified adviser.