Capital Gains and Turning Your Home Into an Investment Property

Many Sydney and Melbourne owners choose to move out of their home and convert it into an investment property. This can unlock rental income and potential capital growth—but it also introduces CGT. The valuation you obtain when your main residence becomes a rental is often the “starting point” for your future CGT calculation, so getting that valuation right is crucial.

Why the “first rented” CGT valuation matters

When you move out and start renting your property, the ATO may allow you to use market value at that date as the cost base for part or all of your CGT calculation, depending on how the main residence rules apply. A CGT valuation at the “first rented” date:​

• Establishes a clear baseline market value for future CGT.

• Separates tax‑free main residence gains from taxable investment gains.

• Provides your accountant with evidence to support apportionment and discounts.​

Without a professional valuation, you risk under‑documenting your cost base or relying on estimates that do not stand up to later scrutiny.

How CGT valuations work for change‑of‑use properties

For change‑of‑use CGT valuations, the valuer identifies market value at the date you first rented the property (or the relevant date under the rules) using sales around that time. Key inputs include:

• Local comparable sales (houses or units) in suburbs like Ryde, Marrickville, Preston, or Bentleigh.

• Condition and improvements as at the date you moved out, not after later renovations.

• Land value drivers—such as school zones, transport, and development potential.​

If you later undertake major works (extensions, rebuilds), an additional valuation date may be advisable to support your accountant’s treatment of capital works and cost base.

Why owner‑occupier landlords should use a professional valuer

Online portals and agent price guides are not sufficient for change‑of‑use CGT evidence. The ATO’s market valuation guidance expects transparent methodology, comparable sales analysis, and documented assumptions.​

A certified valuer can:

• Provide an ATO‑ready report for your “first rented” valuation date.

• Clarify how market conditions in Sydney or Melbourne at that time affected value.

• Assist your tax adviser in correctly applying main residence exemptions and the 6‑year rule where relevant.

Our firm conducts change‑of‑use CGT valuations across both cities, delivering clear, suburb‑level insights owners can rely on.