Under the CGT changes, from 1 July 2027 the 50% capital gains tax discount for individuals, trusts and partnerships is replaced by indexing the cost base to inflation, plus a minimum tax of 30% on real gains. Gains made before 1 July 2027 keep the 50% discount. Investors in new builds can choose either method, and your own home stays exempt.
| Asset | Gain up to 1 July 2027 | Gain after 1 July 2027 |
|---|---|---|
| Bought and sold before 1 July 2027 | 50% discount | Not applicable |
| Held across 1 July 2027 | 50% discount | Indexation and 30% minimum tax |
| Bought after 1 July 2027 | Not applicable | Indexation and 30% minimum tax |
| New build | Choice of the 50% discount or indexation | Choice |
| Your home | Exempt | Exempt |
How does indexation work?
Instead of halving the gain, the cost base is lifted by inflation, measured by the Consumer Price Index, the way it was done between 1985 and 1999. Only the gain above inflation, the real gain, is taxed. The ATO will provide tools for the calculation. The change covers all assets held at least 12 months by individuals, partnerships and trusts, including shares, not just property. Super funds and widely held trusts are excluded.
What is the 30% minimum tax?
Real gains that accrue from 1 July 2027 are taxed at no less than 30%. It matters most to people who sell in a low-income year, such as early retirement, when their marginal rate would otherwise be lower. People already taxed at 30% or more are not affected. Recipients of means-tested income support, such as the Age Pension or JobSeeker, are exempt in a year they receive a payment.
How is a property held across 1 July 2027 taxed?
The gain is split at 1 July 2027. The part up to that date gets the 50% discount, and the part after is indexed and subject to the minimum tax, with the property’s value at 1 July 2027 becoming the cost base for the second part. You set that value in the tax return for the year you sell, in one of two ways:
- A valuation as at 1 July 2027. A formal valuation near that date is the clearest evidence.
- An apportionment formula that estimates the 1 July 2027 value from the growth over your whole holding period.
Gains on assets bought before 1985 that accrued before 1 July 2027 remain exempt.
A worked example with two outcomes
An investor bought a Sydney home for $800,000 in 2020. It is worth $1,000,000 on 1 July 2027 and is sold in July 2032. The example assumes inflation of 2.5% a year after 2027, which lifts the $1,000,000 cost base to about $1,131,408.
| Sale price in 2032 | Old rules: half the whole gain | New rules: half the gain to 2027 plus the real gain after |
|---|---|---|
| $1,150,000 | $175,000 | $100,000 + $18,592 = $118,592 |
| $1,400,000 | $300,000 | $100,000 + $268,592 = $368,592 |
When prices grow slowly after 2027, indexation can tax less than the old discount. When they grow well ahead of inflation, it taxes more. The figures are illustrative; your tax agent will work out the real numbers.
What does it mean for buying and holding property?
- Keep good records of purchase costs and improvements, as you always should.
- Think about a valuation around 1 July 2027 for property you plan to keep.
- Plan the timing of a sale with your income in mind, because of the minimum tax.
- Weigh new against established, since new builds keep a choice of methods and negative gearing; see the negative gearing changes.
How does it change a plan to sell and buy?
When a loan depends on selling an investment property, lenders and buyers both look at the cash left after the sale. Capital gains tax comes out of that cash, usually in the following tax year. If you are using a sale to fund a deposit, a bridging loan or a debt reduction, estimate the tax first with your accountant, because the new method can produce a different figure from the old one. The guide to bridging loans explains how lenders treat the sale proceeds, and the bridging loan calculator works out the end debt.
Which records should you keep from now on?
- The contract and settlement statement from the purchase, including duty and legal costs.
- Receipts for capital improvements, such as a new kitchen or an extension.
- Evidence of the value at 1 July 2027 if you hold the property across that date.
- Records of any period you lived in the property, which affects the exemption.
Does it change anything for your home?
No. The main residence exemption continues. If you rent out a former home, the 6-year rule still applies; the article on renting out your home explains it. Australians who move overseas should read moving overseas with a mortgage, because foreign residents lose the main residence exemption entirely.
Questions people ask
Is the 50% CGT discount gone?
Not for gains made up to 1 July 2027, or for new build investors who choose it. For other gains after that date, indexation and the 30% minimum tax apply.
Do I need a valuation at 1 July 2027?
It is not compulsory. You can use a valuation or the apportionment formula when you sell, but a valuation near the date is the clearest record.
Does the change apply to shares too?
Yes. The CGT change covers all assets held by individuals, trusts and partnerships, not only property.
Charles Touma does not give tax advice, but he plans investment loans around the hold period and exit you and your accountant settle on. A free 30-minute call covers how a purchase or sale fits your borrowing. General information only, not tax, legal or credit advice; speak with a registered tax agent about your own position.
Sources: ATO, reforming negative gearing and capital gains tax; Budget 2026-27 tax explainer, cost base indexation, minimum tax and transitional arrangements, checked 18 October 2026.
General information only, not credit, legal or tax advice. Your situation is assessed properly before any recommendation. Government scheme details change; figures are current at the time of writing.
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