Are You Ready for the 2027 Capital Gains Tax Valuation Changes?

down the barrel of a nightmare on July 1 next year when they're going to value everything. Heron Todd White's Managing Director Gavin Holcomb breaks it down for us after the break. Thanks for being with us here on Business Now. Well since the budget and the change to capital gains tax we've highlighted on this program the potential nightmare of every person having to value every asset on July 1 next year. So think about this every share that's kind of pretty simple. Every property? A bit more difficult. Every stamp collection? Every wine collection? Record collection? Cars? Pokemon cards? Whatever you're into. It seems frankly nuts. Well let's just stick with properties for a moment. The task would seem to be massive. Around two and a quarter million Australians own an investment property. So what to do? Heron Todd White is Australia's largest provider of independent property valuations. Its Managing Director of Commercial, Agribusiness and Government is Gavin Holcomb who joins me now. Gavin many thanks for your time. Is it going to be as big a nightmare as what that sounds, what I'm trying to paint? Oh look I think it's certainly going to have its challenges but I think one of the things that is most likely to happen is that it won't be a relevant date being 1 July 27 but in all reality a lot of valuations will be done retrospectively. So the trigger for the capital gains is really when the property sells and the reality is probably a lot of people will start thinking about it when that happens but of course you know those that are a little bit more organised and much more on the ball it does make sense to get the valuation done as soon as possible you know or as close to 1 July 27. Okay because Treasury seems to be suggesting that what you could do is wait until you sell a property say for example and then if even if you bought it before 1 July next year you could take it back to the date at which you bought that property and do a straight line valuation and basically take the average and then take it on from there but that to me seems to be fraught if you've had big gains up until July 1 next year and then the property goes kind of flat. Is that the way in which you might think about it if you're considering whether you need a valuation or not? Oh look I think a lot of investors if they were to take that path would be substantially worse off that's likely to trigger a much higher capital gains tax liability than actually recognising the valuation as at the relevant date of 1 July 27. To do that straight line that would significantly disadvantage a lot of investors around the country. So if that would disadvantage a lot of investors around the country why do you imagine that the Government via Treasury would actually even put this up as an idea is it because it's a kind of simple solution for those people who choose to be lazy or do nothing or is it just simply a convenience to say hey listen we know this is a bit of a nightmare don't try and do it we'll actually work it out once you've sold? Look I suspect it's probably a combination of both it's potentially an easy option that the Government's presenting to investors but I think it really doesn't it's not necessarily in the investors best interest I think they could be substantially disadvantaged and you know and I think the reality is all investors should be really prudent they should look at both methods and work out which actually suits them best at that point in time. Okay so Herentod White is the largest valuation company in Australia you do more valuations than anybody how many valuations give or take would Herentod White do in a year? Oh look we do somewhere in the order of 400,000 valuations a year. Okay 400,000 valuations but we're talking here about two and a quarter million you know sort of properties that are held by investors to say nothing of the farms that you would value to say nothing of independent businesses you would value where is there even capacity to have all of these assets valued at least roughly around that date when there's going to be demand for them to be valued then? Yeah look as I said I think that's the relevant date but in all likelihood a lot of the valuations will be done retrospectively so a lot of them will be actually undertaken over the next five to ten years I mean we're actually still doing valuations dated one July 2000 for GST margin schemes so you know it's certainly not an unheard of precedent where valuations are done retrospectively so you know the reality is they'll be spread over a number of years there is more capacity coming into the industry at the moment it's you know the valuation numbers do mirror to some degree the transaction volumes and you know we've certainly had the banks come out talking about you know the reduction in applications the reduction in new mortgages so you know there is capacity coming into the industry and I think it's something that the industry will be able to manage you know reasonably well. It's going to be interesting to watch it Gavin Holcomb we'll stay in touch I think it's a good subject anyway from here in Sodwight many thanks for your time today. Sounds good thanks Ross thanks for having me. Well coming up the most viewed property is going to what