Bale moved to the Santiago Bernabeu from Tottenham last September, for what is widely thought to be a world-record fee.
The Wales international enjoyed an impressive debut campaign, scoring in both the finals of the Copa del Rey and UEFA Champions League finals as Real lifted the trophies.
Overall, Bale scored 22 goals in 44 appearances in his maiden season in the Spanish capital - but coach Ancelotti feels there could be even more to come from the 25-year-old in 2014-15.
"Yes he [Bale] had a really good holiday, 40 days," Ancelotti said. "He's fresh. He's working well.
"He's doing what he wasn't able to do last year. So, he's training well.
"He's preparing well for next season. Everyone is sure it will be better for him this year."
James Rodriguez, arguably the star of the World Cup with Colombia, was added to Real's ranks from Monaco on Tuesday - and Ancelotti believes the playmaker could prove a huge hit with the Bernabeu faithful.
"James is going to start with the group from August 1," the Italian added.
"As we have said he is a very important player because he has quality to play in our team. Moreover, he is a very young player and he might represent a good investment for the future of this club."