Property Investors: The CGT Valuation Rush Is Only the Beginning

The valuation deadline is the least of it

An Eastern Suburbs real estate view on the tax, lending, strata and supply changes converging on property investors before 1 July 2027 — and why the whole position, not just the valuation, deserves a review.

A recent warning about property investors needing valuations before the new capital gains tax regime has attracted plenty of attention. But from a real estate perspective, I believe the bigger story is being missed.

The valuation issue is only one part of a much larger change heading towards Australian property investors. Tax rules are changing. Negative gearing is changing. Lending has tightened. NSW landlords have more rules to deal with. Land tax is becoming a greater holding cost. More apartments are being planned and built. And, at the same time, Sydney buyers are becoming more selective.

For property owners, particularly those who have held investment properties for many years, this is the time to review the entire investment — not simply organise a valuation.

The CGT rules change from 1 July 2027

From 1 July 2027, the existing 50% capital gains tax discount will be replaced for future gains by inflation-based cost-base indexation, together with a minimum 30% tax rate applying to real capital gains.

Importantly, this does not mean the entire profit on an investment property suddenly becomes subject to the new system. For an investment already owned before 1 July 2027, the gain accrued before that date remains under the existing CGT arrangements. The gain accruing after that date falls under the new system.

That creates an obvious question: what was the property actually worth on 1 July 2027?

The legislation allows investors to establish that value through a valuation or use a prescribed apportionment method. The concern raised by accountants is that property does not necessarily appreciate evenly every year. A property may have experienced most of its growth during one particular period. That is why an independent, properly supported valuation could become an extremely important document years later when the property is eventually sold.

As an agent, my view is simple: this is not about trying to manufacture the highest possible valuation. It is about having credible evidence supported by comparable sales and market conditions at the relevant date.

Negative gearing is changing too — and it may matter more for established apartments

From 1 July 2027, negative gearing will largely be restricted to eligible new residential construction. Properties already held before 7:30pm on 12 May 2026 are protected under the existing arrangements.

However, investors purchasing established residential property after that date will not be able to offset future rental losses against unrelated income such as salary and wages. Those losses can generally be used against residential property income or carried forward. Eligible new builds receive different treatment and can continue to qualify for negative gearing.

This has significant real estate implications. For decades, an established apartment could be assessed partly on rent, partly on expected capital growth and partly on the tax benefit created by negative gearing. For many new investors, that equation is changing. And when the tax system deliberately favours new construction, some investor demand is likely to be redirected from older apartments towards new projects.

That does not make established property a bad investment. Far from it. Location, land value, aspect, scarcity and quality will remain enormously important. But an ordinary established apartment will increasingly have to stand on its actual investment fundamentals rather than tax advantages.

Borrowing capacity has become another hurdle

Tax is only half of the equation. Buyers still need finance.

APRA introduced a debt-to-income lending limit from February 2026. Banks are generally limited so that loans with debt of six times income or more cannot exceed 20% of new owner-occupier lending and 20% of new investor lending, measured separately. APRA’s existing mortgage serviceability buffer also remains at three percentage points. Meanwhile, the RBA cash rate is currently 4.35%, following three increases during 2026.

For sellers this matters enormously. A buyer may love your property and still be unable to borrow what they expected.

The days of assuming that another buyer will simply come along and pay more need to be treated carefully.

NSW investors are carrying higher long-term costs

NSW’s general land-tax threshold has been fixed at $1.075 million, rather than continuing to rise each year with land values. Above the threshold, the general rate is $100 plus 1.6% of land value above the threshold, with a higher premium rate applying above $6.571 million.

For investors holding multiple properties, particularly in Sydney where underlying land values can be substantial, a frozen threshold means that over time more property owners can be drawn into the land-tax system as land values rise. It is another cost that needs to be added to interest, council rates, strata levies, insurance, repairs, management fees and compliance costs.

Property investment should increasingly be assessed on net return, not simply the weekly rent.

Selling a tenanted property now requires more planning

NSW rental laws have also changed. Landlords can no longer simply terminate a tenancy without a specified ground. A valid reason and, in many circumstances, supporting documentation are required. Selling remains a legitimate ground.

An owner proposing to sell with vacant possession can rely on the sale provisions, but the required process and documentation need to be followed. If a property has already been sold, the contract must require vacant possession before that ground can be relied upon. NSW also imposes restrictions on re-letting where a tenancy has been ended because of a proposed sale.

For an investor thinking of selling, tenancy planning therefore needs to start well before the photography and advertising. Whether the property should be sold vacant or tenanted, when the lease expires, how the tenant is approached and what type of buyer is likely to purchase it can materially affect the result.

More housing supply is coming

There is another change investors cannot ignore: supply. NSW is targeting 377,000 additional homes by 2029, including substantial additional housing across Sydney.

In Waverley alone, the government’s five-year housing target is 2,400 completed additional homes by 2029. Bondi Junction’s adopted long-term Master Plan provides capacity for approximately 3,000 additional dwellings, concentrated around Oxford Street Mall, Bondi Road, the civic precinct and surrounding centres.

More housing is necessary for Sydney. But existing apartment owners also need to understand what happens when their property comes onto the market beside newer buildings offering new kitchens, new bathrooms, gyms, concierge facilities, warranties, incentives and modern common areas.

Older apartments with exceptional positions, views, larger floorplans, good strata management and reasonable levies should continue to have their own appeal. Generic stock will have more competition.

Strata is becoming part of the value equation

Buyers are also becoming much more sophisticated about strata. They are looking beyond the apartment itself and examining the owners corporation’s finances, capital works plan, building defects, litigation, insurance, major expenditure and special levies.

NSW Government guidance specifically warns purchasers that unusually low levies may simply mean larger increases or special levies later if insufficient money has been accumulated for major works. Recent NSW strata reforms have also increased governance and maintenance obligations, while owners corporations undertaking common-property work valued at $30,000 or more are required to obtain at least two independent quotations.

For sellers in older apartment buildings, the financial health of the strata scheme can now be almost as important as the presentation of the apartment.

A beautiful renovation cannot hide a poorly funded building forever.

And this is happening while the market has already softened

These changes are not arriving in a booming market. Cotality reported Sydney dwelling values falling 1.4% in July 2026, while Australia’s national Home Value Index recorded its largest monthly decline since December 2022. Sydney’s final auction clearance rate for the week ending 9 August was 51.5%, compared with 70.5% at the same time the previous year.

That does not mean every suburb or every property is falling equally. Quality, scarcity and location still matter. But it does mean sellers need to understand the difference between yesterday’s price and today’s market.

The question investors should now be asking

The question is no longer simply what is my property worth? The better questions are:

• What is it worth today?
• What will it cost me to keep?
• What tax position will I be in after 1 July 2027?
• What major strata expenses are coming?
• What new developments will compete with me?
• What happens when my current lease expires?
• And if I intend to sell in the next few years, when is the most sensible time to do it?

There will be owners for whom holding remains absolutely the right decision. There will be others who discover that a property purchased many years ago has delivered an excellent result, but the combination of tax, interest, land tax, strata expenditure, regulation and additional supply means the next ten years may look very different from the last ten.

That is why I believe investors should be reviewing their properties before they are forced to make a decision. Selling property successfully in a changing market is no longer about putting it online, running an auction and hoping competition takes care of the rest. It requires understanding the owner’s position, the property, the competing supply, the buyer pool and, most importantly, the timing.

The CGT valuation deadline may be what gets investors’ attention. But it is everything happening around it that property owners should really be watching.