Property investors are being warned that they will face tougher scrutiny at tax time next year once the Federal Government’s new Capital Gains Tax (CGT) discount changes come into effect.

The Australian Taxation Office (ATO) has already revealed it will be looking out for “inflated valuations’ designed to avoid the full force of the reforms.

The new laws mean the 50% discount on CGT discount will be replaced with a 30% minimum tax rate on capital gains from July 2027.

For those who already owned an investment property before the new rules were announced, gains made up to the end of June 2027 will have that portion decided under the old system, with any gains earned after then worked out under the new system.

To help do this many investors are having valuations done on their properties now, although not all are required to have one professionally done.

For those who don’t have a professional valuation done, the ATO is already warning it will be looking out for anyone deliberately inflating a valuation to take advantage of the pre-existing discount to reduce tax.

It says valuations done by professional valuers are generally more credible than those provided by someone who isn’t a professional valuer.