What the New Capital Gains Tax Rules Mean for Your Real Estate Business

Capital gains tax is changing in Australia after the 2026 Federal Budget, and for real estate business owners, particularly those holding rent rolls or agency equity, the reforms raise a practical question: will you need a valuation to work out what you will be liable for if you sell?

The short answer is yes, in most cases, though this is less a new obligation than a shift in how existing valuation practice gets used.

Here’s a short explainer of capital gains tax reform and some information about where valuations fit in at this point in time. 

What’s changing with Capital Gains Tax in Australia?

From 1 July 2027, the 50 per cent capital gains discount property and business owners have factored into their wealth planning for years is being replaced for businesses generating over $10 million in annual turnover. In its place: cost base indexation, which adjusts for inflation, and a minimum 30 per cent tax rate on real gains for assets held longer than 12 months.

The reforms don’t apply to past earnings, so gains made before 1 July 2027 keep the current 50 per cent discount and any equity built before this date will be protected under the old rules when the asset is sold.

This has been the biggest change to the property investing landscape in decades, but it affects the businesses supporting the industry because they are assets which capital gains tax applies to. 

Why agency and rent roll valuations matter more now

A sale, a transfer or a restructure is a ‘CGT event’ and a market valuation helps ensure the exchange happens at the right price.

For real estate businesses, this typically means valuing the rent roll or property management portfolio, often on a management fee multiple, and valuing the trading entity itself if company shares or trust units are changing hands. 

What changes with CGT updates is the need for a defensible value as of 1 July 2027. Where a business or rent roll is held before this date and sold after it, you will need to split the gain into two portions. The pre-2027 portion keeps the existing discount. The post-2027 portion is indexed and taxed under the new minimum rate.

To determine the split, no matter when you sell, it will make things a lot easier if your agency or rent roll has evidence of a formal valuation dated as close to 1 July 2027 as possible

Retrospective valuations

A retrospective valuation, done years after the fact, is considerably more difficult and expensive to produce than one done at the time. Reconstructing your financial position as at a past date means compiling a list of properties managed at the time, something which becomes harder and harder to extract accurately as time passes.

While there will be an ATO‑approved formula and tools to help estimate value based on growth rates, you will save yourself trouble in the future if you request a valuation over the next 12 months, regardless of when you are planning to sell or restructure. 

What this means for agency and rent roll owners

There’s no requirement to have your agency valued on a regular basis, and nothing changes for gains earned before the Federal Budget requirements come into effect. 

The main things to understand are:

• The CGT changes and if/how they will impact the financial return from the sale of your business

• The benefit of having a valuation as close to July 1, 2027 as possible

Having a well-evidenced valuation issued around July next year will make your eventual capital gains calculation considerably more straightforward and considerably more defensible. You’ll be doing your future self a favour and potentially saving money as well. 

It's inevitable your agency or rent roll will change hands in the future, so taking steps to book your valuation will make the process easier when the time comes.

FAQs:

• Do the new capital gains tax rules apply to my agency if I sell before 1 July 2027?

  No. The current 50 per cent CGT discount still applies to any sale, transfer or restructure that occurs before 1 July 2027. The new rules: cost base indexation and a minimum 30 per cent tax rate on real gains only affect gains made from that date onwards, and only for businesses turning over more than $10 million a year.

• Why should I get my rent roll or agency valued now if I'm not planning to sell?

  Because any gain made after 1 July 2027 will need to be separated from the gain built up before that date, and the cleanest way to prove the split is with a formal valuation dated close to 1 July 2027. Reconstructing that figure years later: pulling together the properties you managed at the time and your financial position is far harder, less accurate and more expensive than commissioning a valuation while the evidence is current.

• What's actually being valued; the rent roll, the business, or both?

  Both, depending on what would change hands in a sale. The rent roll or property management portfolio is typically valued on an EBIT or management fee multiple, and the trading entity itself is valued separately if company shares or trust units are involved. A CGT event covers a sale, a transfer or a restructure, so the valuation needs to reflect whichever assets would move.