A rush is on for property valuations ahead of upcoming capital gains tax changes as owners look to secure the highest valuation for their property in order to cut down on the amount of funds sent to the tax office.
Property valuer Andrew Tunbridge from Savills makes a living getting the numbers right, and he says demand is about to surge.
Investors rush to value properties ahead of tax changes Nine
“The calendar is filling up for July already,” he said.
That’s July next year, when capital gains tax changes kick in.
Australia’s 2.3 million investors will want their properties to be worth as much as possible on that day — not to sell, but to slash their potential future tax bill.
“Most investors goals will be to lock in the most reliable, credible and defensible valuation as the higher you’re starting the higher your starting cost base, the less profit you are taxed on down the track,” he said.
For gains made before then, the existing 50 per cent CGT discount stays. For gains made after, new rules apply — with a minimum 30 per cent tax.
And if you’ve bought a new-build, you can choose which set of rules works best for your household budget.
Investors rush to value properties ahead of tax changes Nine
Simple valuations can cost up to $1,400, but you don’t need one on day one and the ATO won’t accept predictions made early.
“It is recommended that people do undertake a valuation within say three to four months from that date to reflect current market sentiment, the valuers will have best insight on the comparable sales to use,” Tunbridge said.
If you’re thinking of renovating to boost your baseline get advice first, not all add value and if they’re major, you’ll need to finish by July 1.
Treasury is working on a nine-step DIY valuation formula, but reviews are mixed – as it could leave some investors paying more tax
“This calculator takes the actual annualised growth rate from the purchase to the sale and assumes the same rate applied to throughout the holding period,” Tunbridge recommends.
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