Updated 8 October 2026
Property acquired before 20 September 1985 has sat outside the CGT net for forty years. Under the enacted 2027 reform, growth accruing after 1 July 2027 becomes taxable, and the market value at that date becomes the cost base. Pre-CGT owners now need a valuation for the first time.
Need a market value at another past date? See our backdated property valuation service.
At a glance
Capital gains tax began on 20 September 1985 and applied only to assets acquired from that date. Anything acquired earlier fell outside the regime entirely, so a property bought in 1978 and sold in 2020 produced no capital gain for tax purposes regardless of how much it had grown.
That status has always been more fragile than owners assume. It attaches to the asset in the hands of its owner, and a range of events can end it: a change in majority underlying ownership of the entity holding the asset, certain restructures, and the death of the owner in some circumstances. Owners who assumed the exemption was permanent have frequently found otherwise.
The reform enacted on 26 June 2026 replaces the 50 per cent CGT discount with cost base indexation and a 30 per cent minimum tax from 1 July 2027 for individuals, trusts and partnerships. It also brings pre-CGT assets into the net for gains accruing after that date.
The mechanism is the same deemed disposal and reacquisition that applies to other assets. A pre-CGT property is treated as reacquired at its market value on 1 July 2027, and that value becomes the cost base for any future gain. Growth from acquisition to 1 July 2027, which for many properties is the overwhelming majority of the growth, remains outside the CGT net.
The result is that the single most valuable number in a pre-CGT property's file is now its market value at 1 July 2027, established by a capital gains tax valuation. Set it too low and future gains are overstated forever.
Warning
The apportionment alternative is worse for these assetsOwners can elect an apportioning method instead of a valuation, splitting the gain by reference to the ownership period. For a property held since the 1970s or early 1980s, one compounding growth rate applied across fifty or sixty years of ownership bears no resemblance to when the value actually accrued. Treasury released the formula as an exposure draft on 3 August 2026, and the direction of the problem is clear.
Division 149 provides that an asset stops being a pre-CGT asset when majority underlying interests in it are no longer held by the same ultimate owners who held them immediately before 20 September 1985. It is most commonly triggered where the property is held through a company or trust and the ownership behind that entity has changed.
When it bites, the asset is treated as acquired at its market value on the day the status was lost, which creates a retrospective valuation date that may be years or decades in the past. Common triggers include shares changing hands in a family company, a trust's beneficiaries changing substantially, and generational transfers within an entity structure.
Entities holding long-standing property should establish whether Division 149 has already applied before assuming the 1 July 2027 date is the relevant one. The two are different valuation dates with different consequences. See retrospective valuations.
A capital improvement to a pre-CGT asset can be treated as a separate CGT asset where it is substantial enough. The threshold is indexed annually and the improvement is also tested against a proportion of the asset's value, so a major extension, a second dwelling or a significant redevelopment on a pre-1985 property may already be a taxable asset in its own right.
Where that applies, the improvement has its own cost base and its own history, and disentangling it from the underlying land often needs a valuation that separates the components. Tell us if the property has had major works and when, and we will make sure the report addresses the right thing.
Where a pre-CGT property passes through a deceased estate, the beneficiary takes the market value at the date of death as the first element of their cost base under section 128-15(4). The pre-CGT status does not pass to them; the date of death value does.
Estates dealing with a property held since before 1985 therefore need the date of death value, and if the beneficiary retains it past 1 July 2027, a value at that date too. See deceased estate valuations.
To see what the reset does to a pre-1985 holding in dollars, use our capital gains tax calculator.
Establish the market value that will carry your cost base into the new regime. Independent reports signed by a Chartered Accountant and Certified Property Valuer. Residential $297, commercial $595, AUD inc. GST, delivered in 24 to 48 hours.
Start your orderHow it worksNote
Worked exampleA commercial property bought in 1979 and held ever since. At 1 July 2027 it is worth $1,800,000. It is eventually sold in 2040 for $2,500,000.
With a valuation at 1 July 2027, the cost base is $1,800,000 and the gain brought to tax is measured from there: $700,000 nominal, reduced further by indexation of that cost base before the 30 per cent floor is applied. Everything the property gained between 1979 and 2027 is never taxed.
Without one, the owner is left electing the apportioning method and accepting a formula-driven split across more than sixty years of ownership, or commissioning a retrospective 1 July 2027 valuation in 2040 when the evidence is thirteen years old.
We have not modelled the final tax figures because Treasury released the exposure draft of the apportioning method on 3 August 2026 and it can still change before it is registered.
Further background in pre-1985 property and the 2027 reset.
| Report | Fee (AUD inc. GST) | Turnaround |
|---|---|---|
| Residential, any date including 1 July 2027 or a Division 149 date | $297 | 24 to 48 hours |
| Commercial, any date | $595 | 24 to 48 hours |
Rural holdings and specialised commercial assets are quoted individually, which is common for property of this vintage.
Gains accrued up to 1 July 2027 remain outside the CGT net. From that date the enacted reform brings pre-CGT assets into the net for future growth, with the 1 July 2027 market value becoming the cost base. The exemption for historical growth is preserved, not removed.
If you will still hold it on 1 July 2027, yes, because that date's market value sets the cost base for all future gains. You can instead elect the apportioning method, but for a property held since before 1985 one compounding growth rate across the whole period rarely reflects when the value actually accrued.
It provides that an asset stops being a pre-CGT asset when majority underlying interests are no longer held by the same ultimate owners who held them immediately before 20 September 1985. Where it applies, the asset is treated as acquired at market value on the day the status was lost, creating a historical valuation date of its own.
A capital improvement to a pre-CGT asset can be treated as a separate CGT asset where it exceeds an indexed threshold and a proportion of the asset's value. Major extensions or redevelopments on a pre-1985 property may already be taxable assets in their own right, which is worth confirming with your accountant.
