Labour's CGT Valuation Day: 1 July 2027 Explained

What we know so far — and this is still a proposal, not law. The 1 July 2027 valuation date is one of the more specific mechanics in Labour’s capital gains tax (CGT) policy, but a key piece — how the valuation would actually be done — hasn’t been announced. This article covers what Labour’s policy document says, and is explicit about the gap. For the rest of the proposal, see Labour’s capital gains tax explained.

How the mechanism works

Labour’s CGT is forward-looking: it applies only to gains made after 1 July 2027. The value of a commercial or residential property (excluding the family home) would be taken as at that date. Any increase in value before 1 July 2027 would not be taxed — only gains made after that date, and only when the property is sold.

Labour’s own worked example: a commercial building is bought on 1 July 2025 for $400,000. On 1 July 2027 it’s valued at $600,000, and it’s later sold for $700,000. The tax would apply only to the $100,000 gain made after 1 July 2027 — not to the $200,000 of value already accrued before the valuation date.

Why this isn’t “grandfathering”

It’s easy to conflate a valuation-day mechanism with grandfathering, but Labour has drawn the distinction explicitly. Grandfathering would mean excluding assets bought before a certain date from the tax regime entirely. A valuation-day approach does the opposite: every in-scope property — no matter how long ago it was bought — gets pulled into the regime, with only the pre-valuation-date gain excluded. Hipkins has said Labour took the advice of Australia’s experience: rather than set an introduction date that would have grandfathered pre-existing assets out of the rules, “we went with a valuation date. It’s very clear, it’s very simple.”

The practical effect: a property bought in 1995 and a property bought in 2026 are treated the same way from 1 July 2027 onward — both get a value at that date, and both are taxed only on the growth from there.

Properties bought after the valuation date

If you buy a property after 1 July 2027, there’s no valuation-day step for you — your purchase price is simply the baseline, and the taxable gain is calculated the normal way: sale price minus purchase price minus eligible deductions.

The part that’s still unspecified

Labour’s document states that “different options will be available to assess the value” of a property, in line with the 2019 Tax Working Group’s recommendations — but does not name a specific method. It’s not yet clear whether valuation would be based on rateable/capital value, an independent registered valuation, self-assessment, or some hybrid of these. This is the single largest open mechanical question in the whole policy, because the choice of method directly affects how much tax any given owner would eventually pay. Until Labour specifies this, any figure calculated from an assumed valuation method — including on our own calculator — is necessarily a labelled assumption, not a confirmed number.

International precedent Labour points to

Labour’s policy document cites Canada, the UK and South Africa as examples of countries that have used a valuation-day approach in their own capital gains regimes, framing it as an established, non-novel mechanism rather than something untested.

What this means alongside the bright-line test

Because the valuation-day mechanism only starts operating from 1 July 2027, it wouldn’t interact with the current bright-line test until then — property sold before that date would be assessed only under today’s rules. See Labour’s CGT vs the bright-line test for the full comparison, and what property investors should know for how the valuation baseline feeds into a rental or commercial property calculation.

Try it with your own dates

The Labour capital gains tax calculator lets you toggle whether a property was bought before or after 1 July 2027 and estimates the CGT that would apply either way, flagging the valuation-method assumption clearly in the result.