Selling a Torquay holiday home: CGT and the valuation date

Plenty of Torquay and Jan Juc houses are kept as holiday houses by owners whose main home is somewhere else. When one of those houses is sold, given away or passed on, the capital gains tax question usually turns on two things: whether the house was ever the owner's main residence, and what it was worth on a particular day. This guide covers when a valuation is needed and what the valuer needs from you. It is general information, not tax advice; your accountant decides which rule and which date apply.

A holiday house is usually not your main residence

The ATO's main residence eligibility rules give a full exemption only where the dwelling was your home for the whole time you owned it and was not used to produce income. The same page says that to be your main residence, a property must have a dwelling on it and you must have lived in it. A Torquay house used only for summer stays and weekends, while your family, belongings and mail are at a home elsewhere, is unlikely to meet that test.

So a house in Torquay kept for summers, while the family lives in Geelong or Melbourne, is generally subject to CGT when sold. If you bought it and have the contract and settlement papers, the purchase price and costs form the cost base and no valuation may be needed at all. A valuation becomes necessary when the law, or a gap in your records, makes market value at some date the starting point.

Where a former Torquay home becomes the holiday house

Some owners go the other way. A family lives in Torquay, moves for work, and keeps the house for holidays or lets it.

The ATO page on treating a former home as your main residence says you can choose to keep treating it as your main residence for up to six years after you stop living there if it is used to produce income. If it is not used to produce income, for example left vacant or used as your holiday house, there is no time limit. The choice still has to fit with the one-main-residence rule.

Letting a former home also brings in the ATO rule on using your home for rental or business. Where you acquired the home on or after 20 September 1985, first used it to produce income after 20 August 1996, and would get only a partial exemption, you are taken to have acquired it at its market value when it was first used to produce income. That market value is the figure a retrospective valuation supplies.

A hypothetical example: an owner lived in a Jan Juc house from 2012, moved to Melbourne in 2019 and began listing it for short stays that summer, then sells in 2026. If the six-year choice does not cover the whole period of letting, the accountant may need the market value on the first day it was let. That is a day in 2019, and the house has to be described as it was then.

Do not mix up the State and federal tests

Torquay owners often meet the State Revenue Office's holiday home rules first. The vacant residential land tax exemption for a holiday home turns on you or relatives using it for at least four weeks in the calendar year. That test has nothing to do with CGT. Four weeks of family use does not make a house your main residence for the ATO, and claiming the State exemption does not change your CGT position.

What the valuer needs for a past date

The ATO's guide to market valuation for tax purposes treats value as time-specific: it is assessed against the market at the valuation date, not with hindsight. For a Torquay house, two things follow.

First, the comparable sales are those that had settled by that date. Surf Coast Shire's Urban Futures Strategy page for Torquay-Jan Juc says 5,500 new homes were built in Torquay over the last two decades, so a sale in an estate that had not yet been built is no help for an earlier date.

Second, the house must be described as it stood. Extensions, decks, second storeys and pools added since then come out of the picture. Useful records include photographs, the old listing if the house was bought through an agent, building permits, and the rates notice for that year, which shows the Valuer-General's CIV at 1 January. That CIV is a rating figure, not a market valuation, but it helps confirm what the Valuer-General understood was on the land.

Ordering the right report

For the market value on an event date, order a CGT valuation. Where the figure is the starting value when a former home was first let, the cost base valuation is written for that date. The Torquay FAQ covers how a signed valuation differs from an agent appraisal. If the dates or the history of the house are uncertain, contact the site before ordering and confirm the date with your accountant.