Glossary
CGT valuation terms, in plain English
What the words in a capital gains tax valuation mean, without the jargon.
- 30% minimum tax on capital gains
From 1 July 2027, a 30 per cent minimum tax on certain capital gains made by Australian resident individuals. It comes in with indexation of the cost base, which generally replaces the 50 per cent discount. It does not apply to companies.
See also50% CGT discountIndexation
- 50% CGT discount
The 50 per cent discount on capital gains that Australian resident individuals, trusts and partnerships have generally had. From 1 July 2027 it is generally replaced by indexation of the cost base and, for individuals, a 30 per cent minimum tax on certain capital gains, though gains that built up before then keep it. Companies never had the discount.
- Absence rule
The rule in section 118-145 that lets you choose to keep treating a former home as your main residence after you move out: for up to six years at a time if it is used to produce income, such as rent, or indefinitely if it is not. While you use it, you generally cannot treat another property as your main residence. See the six-year rule.
- Agent’s appraisal
A real estate agent’s opinion of the price a property is likely to sell for, often given free. It is not a valuation report prepared for tax, so it gives a CGT figure less support. See appraisal or valuation.
See alsoMarket valueOnline estimate
- Apportioning method
A government-set way of working out the value just before 1 July 2027, which the law allows for as an alternative to market value. It has not been finalised yet: a draft apportioning method was released for consultation in 2026 and, at the time of writing, had not been finalised. See 30 June 2027.
- Arm’s length
A deal between parties with no family, business or other relationship that could push the price up or down. For capital gains tax, where you are not dealing at arm’s length (often with a family member) and the price is more or less than market value, the seller is generally treated as having received market value.
See alsoMarket value substitution rule
- Beneficiary
A person who receives property from a deceased estate. If the deceased acquired it before 20 September 1985, or it was their home just before they died and was not being used to earn income, its market value at the date of death generally becomes the beneficiary’s cost base. Otherwise the beneficiary usually takes over the deceased’s cost base.
- Business real property
Under super law, broadly land and buildings used wholly and exclusively in one or more businesses (section 66 of the Superannuation Industry (Supervision) Act 1993). A self-managed super fund generally must not acquire an asset from a related party, but business real property acquired at market value is one exception. See for SMSF trustees and auditors.
- Capital gains tax (CGT)
Tax on a capital gain, such as the gain when you sell a property for more than it cost. Most gains are worked out from what you paid and what you sold for, with no valuation involved. Market value usually comes in only where the law replaces a price, or where there was no price at all.
See alsoCGT eventMarket value
- Capital improvement
Capital spending to increase or preserve a property’s value, such as an extension or addition. It can form part of the cost base (the fourth element), unless it can be claimed as a deduction. For a valuation at a past date, improvements made after that date are left out of the value. See cost base and capital improvements.
See alsoCost baseIncidental costs
- Capital proceeds
What you receive, or are treated as receiving, from a CGT event, such as the price when you sell. Where you receive nothing, or you are not dealing at arm’s length and the price is more or less than market value, the tax law generally uses market value instead (section 116-30).
- CGT event
An event that can give rise to a capital gain or loss. For property the most common one is a sale, and giving property away is another. Your accountant works out which event applies and when it happened.
See alsoCapital proceeds
- CGT event A1
Disposing of a CGT asset, such as selling a property (section 104-10). If there is a contract, the event happens when you enter into the contract, not at settlement. If there is no contract, it happens when the change of ownership occurs.
See alsoCGT eventContract date
- Comparable sales
Sales of similar properties, close to the property and to the valuation date, that a valuer uses as evidence. Each is checked as a genuine arm’s length sale and adjusted for its differences, such as land size, condition, position and timing.
See alsoMarket valueValuation date
- Contract date
The day a contract of sale is entered into. For capital gains tax, a sale under a contract generally happens on the contract date rather than at settlement, and the ATO says a buyer’s acquisition date is the date on the contract. Some rules look at settlement instead, such as the two-year rule for inherited homes. See contract or settlement date.
- Cost base
The figure a capital gain is measured from. For most property it is based on what you paid. In some cases the tax law uses market value instead, such as an inherited property’s value at the date of death in some circumstances, or the value just before 1 July 2027 for property acquired before 20 September 1985.
See alsoBeneficiaryPre-CGT asset
- Deceased estate
What a person owned when they died, looked after by their legal personal representative until it passes to the beneficiaries. For capital gains tax, a beneficiary is taken to have acquired an inherited asset on the day the person died. See inherited property.
- Deemed sale just before 1 July 2027
Under the new CGT rules, Australian resident individuals and trusts are generally treated as having sold and bought back their CGT assets just before 1 July 2027, at market value. You keep the property, and the value then splits a later gain between the old and new rules. The law also allows for a government-set apportioning method as an alternative, but it has not been finalised yet.
- Desktop valuation
A valuation prepared from sales evidence and your records, without visiting the property. Our Desktop CGT Valuation is $149 incl. GST. Desktop or inspected sets out the views on when one suits.
See alsoInspected valuation
- Executor
The person named in a will to look after the deceased estate. An executor can request a date of death valuation for an inherited property.
See alsoBeneficiary
- Grant of probate
A supreme court’s recognition that a will is valid, which lets the executor represent the estate and distribute its assets. Where there is no will or executor, a supreme court can instead grant letters of administration to an administrator, such as the next of kin. For tax, the ATO recognises the executor or administrator as the authorised legal personal representative once they give it one of these grants.
- Highest and best use
The most valuable use of a property that is physically possible, legally permitted and financially feasible. Market value reflects it, so for a large block it might be redevelopment rather than the house on it.
See alsoMarket value
- Home first used to produce income rule
The rule in section 118-192. If you first used your home to produce income after 20 August 1996 (strictly, after 7.30 pm ACT time that day), and a later sale would only be partly exempt, you are generally treated as having bought it at its market value on the day it was first used to produce income. It can apply when only part of the home earns income. See home becomes a rental.
- In-specie transfer
A transfer of an asset itself, such as a property, rather than money. For a self-managed super fund, the ATO calls a contribution made with an asset rather than money an in-specie contribution, and says the fund generally must not acquire assets, including in-specie, from related parties, with exceptions such as business real property.
- Incidental costs
The second element of the cost base: costs of buying a property, or relating to its sale, such as stamp duty, transfer costs, fees for a legal adviser, surveyor or agent, and advertising to find a buyer. Costs you can claim as a deduction are not included.
See alsoCost baseCapital improvement
- Indexation
An adjustment to the cost base under the new CGT rules. From 1 July 2027, indexation of the cost base generally replaces the 50 per cent CGT discount for Australian resident individuals, trusts and partnerships. Your accountant works out how it applies to you.
See also50% CGT discountCost base
- Inspected valuation
A valuation that includes an inspection of the property by the valuer, with condition and changes since the date taken into account. Our Inspected CGT Valuation is $495 incl. GST.
See alsoDesktop valuation
- Interest deductibility test
The ATO’s test for whether earning income from part of your home affects the main residence exemption: whether you could deduct interest on money borrowed to buy the home, even if you have no loan. If you could deduct part of it, the home is generally subject to capital gains tax to the same extent. See renting part of your home.
See alsoMain residence exemptionHome first used to produce income rule
- Legal personal representative
The tax law’s term that includes the executor or administrator of the estate of someone who has died (section 995-1 of the Income Tax Assessment Act 1997). The ATO says it is usually the executor named in the will, or an administrator appointed by the court, and that the word “legal” does not mean the person must be a legal practitioner. See deceased estates.
See alsoExecutorGrant of probate
- Main residence exemption
The rule that can exempt the gain on your home from capital gains tax, in full or in part. It is not changed by the reforms that start on 1 July 2027. When a home is first rented out, a later sale may be only partly exempt, which is when its value at that date can matter.
See alsoSix-year rule
- Market value
The price a willing but not anxious buyer and seller, both fully informed and dealing at arm’s length, would agree on a given date. The ATO describes it as the estimated monetary worth of an asset on the open market at a particular time, based on its most valuable use. See market value vs sale price.
See alsoArm’s lengthSpecial purchaser
- Market value substitution rule
The rule in section 116-30 of the Income Tax Assessment Act 1997. Where you receive nothing for an asset, or you are not dealing at arm’s length and the price is more or less than market value, your capital proceeds are generally replaced with market value. Exceptions apply.
See alsoCapital proceedsArm’s length
- Online estimate
An estimate from an automated valuation model, such as the price estimates on property websites. The Australian Property Institute says these involve no valuer and are not valuation reports. They work from sales records and property data, so they cannot allow for a property’s condition or a renovation. They are a starting point, not evidence.
See alsoAgent’s appraisal
- Pre-CGT asset
An asset acquired before 20 September 1985, such as property bought before 1985. If the owner still holds it on 30 June 2027, it is treated as sold and bought back just before 1 July 2027, the gain up to then is disregarded, and that value becomes its cost base. If it is inherited, the beneficiary is treated as acquiring it on the date of death, so its market value then generally becomes their cost base, and it is not a pre-CGT asset in their hands.
- Retrospective valuation
A valuation of a property as it was on a past date, using sales evidence from around that date and records of the property then. It is prepared today, but without the benefit of hindsight. See retrospective valuations.
See alsoValuation date
- Six-year rule
A choice that may let you keep treating a former home as your main residence for up to six years while it is rented out. Conditions apply, and your accountant confirms whether it fits you. See home becomes a rental.
See alsoMain residence exemption
- SMSF (self-managed super fund)
A self-managed superannuation fund. It must report its assets, including property, at market value every year, and the fund’s auditor checks the evidence. See SMSF property.
See alsoMarket value
- SMSF auditor
The approved SMSF auditor the trustees of a self-managed super fund must appoint each year to report on the fund (section 35C of the Superannuation Industry (Supervision) Act 1993). The ATO says the auditor checks the valuation of the fund’s assets as part of the audit, but does not value them. See SMSF property valuations explained.
See alsoSMSF (self-managed super fund)
- Special purchaser
A buyer who would pay more than anyone else because the property is worth more to them in particular, such as a neighbour wanting a bigger block. Market value leaves out that extra value, because it assumes a typical willing buyer.
See alsoMarket value
- Stamp duty
A state and territory tax on transfers of property and some other transactions, separate from capital gains tax and assessed by the revenue office where the property is. It is called transfer duty in NSW, land transfer duty in Victoria, conveyance duty in the ACT and stamp duty in the NT. Our valuations are not prepared for stamp duty assessment. See family and company transfers.
See alsoCapital gains tax (CGT)
- Statutory value
The value on a rates or land tax notice, set under state or territory law for rating and land tax. It is not prepared for capital gains tax, and it can differ from market value. In NSW it is the value of the land only, and in the ACT it is an average of unimproved values over five years.
See alsoMarket value
- Two-year rule (inherited homes)
The rule in section 118-195 that can exempt the sale of an inherited home where the deceased acquired it before 20 September 1985, or it was their home just before they died and was not being used to earn income, and the sale settles within two years of the death or a longer period the Commissioner of Taxation allows. Other conditions apply. See the two-year rule.
- Valuation date
The date a valuation states the market value at. For capital gains tax it is set by the tax law, such as the day a home was first rented out, the date of death or the date of a transfer, and your accountant gives it to you. A valuation for a future date is not acceptable for tax.
See alsoRetrospective valuation