A property valuation can support a capital gains tax calculation when market value is required. It does not calculate the tax itself. Start by asking your accountant which rule applies and which date needs to be valued.
What capital gains tax means
CGT forms part of income tax. A capital gain is worked out under the relevant rules, commonly by comparing capital proceeds with the cost base. The result can be affected by losses, exemptions, discounts and other adjustments. The tax event date is not automatically the settlement date.
When a valuation may be useful
Examples include certain family transfers, a home first used to produce income, inherited assets and some relationship breakdown arrangements. Each has different conditions. An inheritance or change of use does not automatically mean tax is payable immediately or that market value becomes the cost base.
A former home and the six-year rule
You may be able to choose to continue treating a former home as your main residence for up to six years while it produces income, subject to the rules. Different treatment can apply when it produces no income. This choice can affect another property's exemption, and residency rules also matter. Ask your tax adviser before assuming a full exemption or deciding a valuation is unnecessary.
What makes a valuation useful
The report should identify its purpose and date and explain the evidence, method and assumptions. The ATO generally focuses on the process and supporting evidence. It does not approve Vanguard Valuations reports in advance, and commissioning a report does not remove the taxpayer's responsibilities.
Records to keep
- Purchase and sale contracts and acquisition costs.
- Dates the property was occupied, rented or available for rent.
- Renovation records, plans and dated photographs.
- Tax adviser instructions, previous valuations and relevant estate or transfer documents.
For an assessment of market value, see our CGT valuation service. We confirm the report scope and fee before you proceed.
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.