Millions of property investors could be overtaxed due to ATO formula

Property investors could be at risk of being overtaxed if they fail to get their real estate holdings valued by next year, tax specialists have warned. A looming federal budget tax reform is set to split capital gains tax on investment properties into two distinct eras on 1 July 2027. The move will directly impact more than 3.3 million residential investment properties across Australia. But industry groups have warned the government’s default formula for calculating capital gains could inadvertently overtax some investors. Under the new system, residential investment properties held before July next year will have their capital gains split. Pre-July 2027 gains will retain access to current settings, including the established 50 per cent CGT discount. Gains after July 2027 will transition to an inflation-adjusted indexation model paired with a 30 per cent minimum capital gains tax floor. Treasurer Jim Chalmers announced the CGT changes with the May federal budget. Picture: Tertius Pickard MORE: Aus’ hidden mortgage default hotspots revealed To calculate the split across these two eras, the Australian Taxation Office will apply a default “straight-line apportionment” method. This met...