For property held on 30 June 2027, the market value at the end of 30 June 2027 becomes the new cost base for future gains. The legislation gives you a choice about how that value is established:
- A market valuation as at the end of 30 June 2027 — the market value just before 1 July 2027; or
- Treasury’s apportioning method — a formula set by the Treasurer (with ATO tools to come) that estimates the 1 July 2027 value by assuming the property grew at one steady rate between what you paid and what you eventually sell for.
Neither is compulsory. This page explains the trade-off in plain English so you can have an informed conversation with a registered tax professional.
How the apportioning method works (illustration only)#
Treasury has released the method as a draft determination; the ATO’s tools to apply it have not been released yet — track them on the ATO guidance tracker. The idea is simple: assume the property grew at one steady rate for the whole time you owned it, and read the 1 July 2027 value off that curve.
Illustration. Say a property was bought in 2017 for $600,000 and sells in 2037 for $1,600,000 — a $1,000,000 gain over 20 years. The draft method does not split that gain down the middle. It applies the one steady growth rate that gets $600,000 to $1,600,000 over 20 years, then reads off the value at the halfway point: about $980,000, not $1,100,000. Steady-rate growth compounds, so the first half of the period accounts for less than half the gain.
Now suppose the property’s actual market value just before 1 July 2027 was higher — say $1,300,000 — because most of its growth happened early, or you renovated in 2024. Then:
- Formula: the pre-2027 portion of the gain is estimated at about $380,000, leaving roughly $620,000 to be taxed under the new, generally less favourable regime (CPI indexation + the 30% minimum rate).
- Valuation: dated evidence of $1,300,000 locks in $700,000 as pre-reset gain under the old rules, leaving $300,000 for the new regime — about $320,000 more gain kept under the old rules than the formula would give.
The reverse is also true: if your property underperformed before 2027 and grows strongly afterwards, the formula could work in your favour. The figures above are illustrative only — the method is still a draft, and it, the ATO’s tools and your personal tax position govern the real outcome.
When each approach tends to make sense#
| Situation | Leaning |
|---|---|
| Steady, average growth; simple history; no renovations | The free formula may do the job |
| Strong growth before 2027 (fast-rising suburb, early gains) | A valuation protects the pre-reset gain |
| Renovations or improvements before 1 July 2027 | A valuation captures value the formula misses |
| Unusual property — few comparables, mixed use, large land | A valuation documents what a formula can’t see |
| You want evidence that stands on its own if questioned later | A signed valuation is independently defensible |
| You’d rather decide later | Possible either way — a retrospective valuation stays available, but evidence gets harder to assemble with time |
Two honest notes. First, the method is published only in draft and the ATO’s tools are still to come, so any figure worked out today — including the one above — can move before the instrument is final. Second, whichever path you choose, records matter either way: purchase costs, improvements and condition evidence — see CGT Cost Base for what to keep.
Common questions#
Do I have to choose now?
Can I use the formula for one property and a valuation for another?
What does a valuation cost against what the formula could save?
Is one approach "safer" with the ATO?
What records should I keep, whichever path I choose?
▶ Watch: these questions explained#
Important#
This page is general education only — not tax, financial, legal or valuation advice. The apportioning method is published only as a draft determination and the ATO’s tools were not yet released at our last review; follow the ATO guidance tracker and confirm your position with a registered tax professional before acting.