Quick answer
A real estate agent's appraisal is a free marketing opinion; a registered valuation is an independent professional assessment signed by a Certified Practising Valuer. For a material CGT position the ATO expects the valuation — prepared to professional standards, with a comparable sales schedule, a stated methodology and a signed certification. An appraisal carries none of that, and is not substantiation.
The difference, line by line
Neither document is dishonest. They are built for different purposes, and the appraisal was never designed to survive a tax review.
Appraisal compared with registered valuation
Why the ATO rejects appraisals
The Commissioner’s expectation is set out in the Market Valuation Practice Instruction: a valuation for tax purposes should be undertaken by a person with the relevant qualifications, experience and knowledge, and the report should show its working. An appraisal typically fails on both counts — the author is not a qualified valuer, and the document states a figure without the evidence behind it.
The practical consequence is not usually an outright rejection letter. It is a request for further substantiation months or years later, at which point the property may have been sold, renovated or demolished, and a retrospective valuation is required anyway — at greater cost and on weaker evidence than if it had been obtained at the time.
When an appraisal is genuinely enough
We would rather tell you not to engage us than sell a report you do not need. An appraisal, or no valuation at all, is reasonable when:
- The property sold on the open market at arm’s length and the contract price is the evidence.
- You are testing whether to sell, and no tax position depends on the figure.
- The amount at stake is immaterial and the ATO is unlikely to examine it — a judgement for your accountant, not for us.
What the difference costs
A standard metropolitan residential valuation starts at $440 including GST. Against that, an amended assessment on a contested cost base routinely runs to tens of thousands of dollars in additional tax, plus shortfall interest and, where the position was not reasonably arguable, penalties.
The valuation fee is also generally deductible as an element 2 incidental cost. The economics are rarely close.
Questions we are asked about this
My accountant accepted an agent appraisal. Is that a problem?
It is a risk rather than an error. The appraisal may never be examined; but if the return is reviewed, the ATO will ask for substantiation and an appraisal will not satisfy the request. Obtaining a valuation at the time is materially cheaper than obtaining one retrospectively under audit.
Can a valuer just review my appraisal and sign it off?
No. A valuation is the valuer’s own opinion, formed from their own inspection and evidence. Adopting someone else’s figure would breach the API Professional Practice Standards and would not be independent.
Is an online estimate any better than an appraisal?
No, it is worse. Automated valuation models are explicitly not accepted for tax substantiation — they involve no inspection and no professional judgement, and they cannot account for condition, improvements or anything unusual about the property.
Keep reading
Sources
- Market valuation for tax purposes — Australian Taxation Office — the eight valuation fundamentals
- Income Tax Assessment Act 1997 — Consolidated Act, AustLII
- Australian Property Institute — Professional Practice Standards and the CPV designation
This page is general information about how valuations are used for tax purposes. It is not tax advice. Your accountant or tax agent should confirm which provision applies to your circumstances.
Written and reviewed by
Jarrad Khoury
Head of Valuations at Asset Valuations Group, where he leads the Business Valuation Services division. Over 10 years in property and business valuation. Registered Valuer in Queensland (Not Limited), Licensed Valuer in Western Australia (Not Limited), CPV through the Australian Property Institute (Not Limited), CPV and CBV through the Australian Valuers Institute, and Registered Business Valuer through the AIBB.
Last reviewed 15 September 2026 · About the practice · Editorial policy