Properties acquired before the introduction of capital gains tax on 20 September 1985 are generally exempt from CGT. But “generally exempt” is not “always exempt,” and when CGT does apply to a pre-CGT property, the cost base is almost always the market value at a historical date, typically the date of death of the owner. This makes pre-CGT property valuations some of the most consequential retrospective assessments in Australian tax.
This guide explains when pre-CGT properties become subject to CGT, how the cost base is determined, why a retrospective valuation is needed, and how we prepare valuations dating back 40+ years.
When CGT applies to pre-CGT property
If you purchased a property before 20 September 1985 and sell it yourself, the sale is generally exempt from CGT. The exemption attaches to the original owner. However, CGT can apply in several scenarios involving pre-CGT property:
Inherited pre-CGT property. When a pre-CGT property passes to a beneficiary through a deceased estate, the beneficiary’s cost base is the market value of the property at the date of the owner’s death. When the beneficiary later sells, their capital gain is calculated from this date-of-death value, not from the original pre-CGT purchase price. A valuation at the date of death is essential.
Substantial improvements after 20 September 1985. If significant capital improvements were made to a pre-CGT property after the introduction of CGT, those improvements may be treated as a separate CGT asset. The land and original structure remain pre-CGT (exempt), but the improvements are subject to CGT. Determining the allocation between pre-CGT and post-CGT components may require a valuation.
Gifting or transferring pre-CGT property. If a pre-CGT property is gifted to a family member (rather than passing through a deceased estate), the CGT exemption may not transfer in the same way. The recipient’s cost base depends on the specific circumstances, and a valuation at the date of transfer may be required.
Date-of-death valuations for pre-CGT properties
The most common reason for a pre-CGT property valuation is inheritance. When the original pre-CGT owner dies, the property’s cost base resets to market value at the date of death for the beneficiary. This is a mandatory reset under the ITAA 1997, and without a valuation, the beneficiary has no defensible cost base when they sell.
The date of death could be recent (in which case a current or near-current valuation is needed) or it could be years or decades ago (requiring a retrospective valuation). If the original owner died in 2005 and the beneficiary is only now selling in 2026, a retrospective valuation as at the 2005 date of death establishes the cost base for the 2026 CGT calculation.
Valuations at 20 September 1985
In some circumstances, particularly where substantial improvements were made after 1985 or where the property has been through multiple ownership changes, a valuation as at 20 September 1985 itself may be needed. This establishes the pre-CGT component of the property’s value, allowing the post-CGT improvement component to be calculated separately.
Preparing a valuation for a date in 1985 is challenging but routinely done. The valuer uses historical sales databases that contain transaction records from the 1980s, council rate records, archived real estate listings, and broad market indices for the relevant area and period. The further back the date, the sparser the comparable evidence, but for most urban and major regional areas, sufficient data exists to prepare a defensible assessment.
How we prepare 40-year retrospective valuations
Our approach to pre-CGT and long-dated retrospective valuations combines multiple evidence sources:
- Historical sales data: Licensed property databases (CoreLogic, state land titles records) retain transaction records going back to the 1970s and earlier in most jurisdictions. We identify sales of comparable properties around the valuation date and adjust for differences
- Council and government records: Historical rate assessments, though not acceptable as standalone valuation evidence, provide useful benchmarking data for the period. Zoning maps and development records help establish the property’s characteristics at the relevant date
- Market context: Interest rates, economic conditions, infrastructure development, and population growth patterns from the relevant period inform the valuer’s assessment of market conditions at the time
- Statement of Facts: The property owner or their adviser provides a description of the property as it existed at the valuation date, including any improvements made before and after the date. For a 1985 valuation of a property that has since been renovated, the valuer must assess the property in its 1985 condition
Our retrospective valuations for pre-CGT dates are the same price as any other valuation: $245 for residential, $550 for commercial. The price does not increase based on how far back the valuation date is.
Worked example: why the date-of-death valuation matters for pre-CGT property
Margaret bought a house in inner Sydney in 1978 for $65,000. She lived in it until her death in 2015. Her daughter, Claire, inherited the property. Margaret’s property was a pre-CGT asset (acquired before 20 September 1985). Claire’s cost base is the market value at Margaret’s date of death in 2015. No valuation was obtained at the time.
In 2026, Claire sells the property for $2,100,000. She needs a retrospective valuation as at 2015 to establish her cost base.
| Scenario | Cost Base | Capital Gain | After 50% Discount | CGT at 37% |
|---|---|---|---|---|
| Without valuation (ATO may use low estimate) | $1,200,000 | $900,000 | $450,000 | $166,500 |
| With professional 2015 valuation at $1,500,000 | $1,500,000 | $600,000 | $300,000 | $111,000 |
The $245 valuation could save Claire $55,500 in CGT. Without a professional valuation, the ATO may apply its own estimate of the 2015 value, which may not reflect the property’s actual condition, improvements, or the specific micro-market at the date of death.
Need a pre-CGT or date-of-death property valuation?
Retrospective desktop valuations for any historical date, including 1985 and date-of-death assessments. Residential $245 | Commercial $550. All Australian locations.
For property held personally rather than inside a fund, our sister brand CGT Valuations prepares pre-CGT valuations as at 20 September 1985, including cases where the property has since been renovated or subdivided.
Frequently asked questions
If you are the original owner who acquired the property before 20 September 1985, the sale is generally exempt from CGT. However, substantial capital improvements made after 1985 may create a separate CGT asset.
The beneficiary's cost base resets to the market value at the date of the owner's death. When the beneficiary sells, CGT is calculated on the gain above this date-of-death value. A date-of-death valuation is essential.
Yes. We prepare retrospective valuations for dates going back 40+ years, including the pre-CGT date of 20 September 1985. Historical sales data, council records, and market indices from the period provide the evidence base. The price is the same as any other valuation.
The valuer assesses the property in its condition as at the valuation date, not as it exists today. A Statement of Facts describing the property's 1985 condition (or condition at the relevant date of death) helps the valuer make accurate adjustments for subsequent improvements.
