Jim Chalmers made headlines this week by walking back part of the government’s negative gearing changes. Good news for a lot of investors. But while everyone was focused on the backflip, a far bigger problem quietly slipped under the radar.
On 1 July 2027, the 50% capital gains tax discount will be replaced on gains made post this date with the new inflation indexation system. And in preparing for it, the government released a 100-page memo this week explaining how investment property owners should establish a valuation baseline before the cutoff.
It runs to nine steps.
Why this matters more than you think
Share portfolios are easy. They’re priced daily. Establishing a market value on 30 June next year is a five-second exercise.
Property is not that simple. To lock in a defensible baseline value for CGT purposes, you’ll need a formal valuation from a registered valuer. Not an estimate. Not a real estate agent’s appraisal. A valuation that will stand up if the ATO ever looks at it.
Now consider the scale of what’s being asked. There are millions of investment properties across Australia. There are approximately 6,000 valuers. The maths does not work.
If you have an investment property and you haven’t already started thinking about this, the time is now. Not in March. Not in May. The closer we get to 30 June 2027, the harder it will be to secure a qualified valuer, and the more that scarcity will cost you.
The backflip that did happen
To its credit, the government did fix one genuine problem this week. Under the original legislation, if you held a negatively geared property and died, or went through a divorce, the grandfathering protections on your existing arrangements would have been lost.
The opposition called it the widows tax and the divorcee tax. It was a fair description. A rule designed to protect existing investors was going to punish them at their most vulnerable moments. Chalmers reversed it.
That’s a sensible fix and a welcome one. But it doesn’t change the broader CGT deadline bearing down on every property investor in the country.
The legislation still has a way to go. The methodology for valuations still needs clarity. And the clock is ticking. Get ahead of this one early.