Property Valuation for Tax Purposes: What Australian Owners Need to Know

When it comes to property ownership in Australia, tax obligations can be complex. Whether you’re selling an investment, managing an estate, or planning for the future, an accurate property valuation is often essential for staying compliant with the ATO and avoiding costly mistakes.

This guide covers how property valuation applies to capital gains tax (CGT), land tax, and deceased estates, including when and why to obtain a professional report.

Property Valuation for Capital Gains Tax (CGT)

If you sell a property that’s not your main residence—such as an investment, inherited property, or commercial space—you may be liable for capital gains tax. CGT is calculated on the difference between the cost base and the sale price, and in many cases, a formal valuation is needed.

When You Need a CGT Valuation:

• The property was inherited and you want to determine its value at the date of death
• You changed the use of a property (e.g. from main residence to rental)
• You don’t have accurate purchase records and need a backdated market value
• You’re applying the main residence exemption for only part of the ownership period

CGT Valuation Requirements:

• Must reflect the market value at a specific date (e.g. date of acquisition or change of use)
• Should be completed by a Certified Practising Valuer (CPV)
• Must include a written, defensible report accepted by the ATO

Property Valuation for Land Tax

In most Australian states and territories, land tax is levied on investment and vacant land once its total unimproved value exceeds a certain threshold. While state revenue offices (e.g. Revenue NSW, SRO Victoria, RevenueSA) provide annual assessments, you may dispute their figures using a professional valuation.

When You Need a Land Tax Valuation:

• You believe the government’s site value is overstated
• You’ve subdivided land and want to clarify each title’s value
• You’re consolidating multiple lots under a single ownership
• You want to plan for future liability when acquiring more land

Land Tax Valuation Requirements:

• Usually reflect the site (land only) value, not including dwellings or improvements
• Must be based on the same valuation date used by the state revenue office
• Should include comparable vacant land sales and local zoning information

Property Valuation for Deceased Estates

When administering an estate, executors are often required to determine the market value of property at the date of death, particularly if:

• The property is sold and CGT applies
• The asset is being distributed between multiple beneficiaries
• A fair and transparent valuation is needed for legal or family reasons

In many cases, the valuation forms part of the probate application or estate tax planning, and a professional, arm’s-length report is recommended.

Why a Formal Property Valuation Matters for Tax

Valuation Methods for Tax Purposes

Valuers may use different methods depending on the type of property and valuation purpose:

• Direct Comparison: For residential and commercial property sold on the open market
• Summation Approach: Adds land and improvement values, less depreciation
• Capitalisation of Income: Used for income-producing properties like rentals or retail spaces
• Retrospective Valuation: Assesses value at a historical date (commonly required for CGT or estates)

Conclusion

Whether you’re reducing risk, fulfilling legal obligations, or planning your next move, a professional property valuation ensures that your tax reporting is accurate, fair, and legally defensible.

Always work with a Certified Practising Valuer (CPV) who understands both your local property market and the tax implications tied to the valuation date and purpose. It’s a small cost for significant peace of mind.