CGT Reform for Property Investors: Cost Base Indexation + 30% Min Tax from 1 July 2027

General information only. This is not tax or financial advice. Consult a registered tax agent for advice specific to your situation.

Budget 2026 ended the 50% capital gains tax discount on investment property. From 1 July 2027, gains on residential and commercial investment property held by individuals, partnerships and trusts are taxed under two new rules instead: the cost base — what you paid plus your costs — is uplifted for CPI inflation over the holding period (so only the “real” gain after inflation is taxable), and a 30% minimum effective tax rate applies to that real gain.

Your principal place of residence remains 100% exempt under the main residence exemption — the reform does not touch the family home. This article walks through what is caught, the three-bucket transition specific to property, four worked examples (a pre-reform sale, a long-hold split, a fresh post-2027 purchase, and a low-income retiree), the new-build carve-out, and the cost-base interactions that property investors need to plan for in the 14 months before the changeover.

The short version: If you bought before 1 July 2027 and sell after, the ATO splits your gain into two parts — the old half and the new half. The old half keeps the 50% discount. The new half gets indexed for inflation (so you only pay tax on the gain above inflation) but pays at least 30%.

Translation: If your marginal tax rate is below 30%, you’ll pay 30% on the new-rules part of your gain. If it’s above 30%, you keep paying your higher marginal rate on that part.

For the cross-asset overview (shares, units, crypto) and Treasury’s source examples, see the master article: 50% CGT Discount Reform: Cost Base Indexation + 30% Minimum Tax from 1 July 2027.

Timeline — when each change hits your property investment

The reform is fundamentally about dates — what you bought when, and when you sell decides which rules apply. Here’s the calendar of trigger points every property investor should pin to the wall.

Date	What happens	What it means for you
12 May 2026	Budget 2026 announcement. Markets digest, no legal effect yet.	Don’t rush to sell yet — plan first.
2026-27 income year (1 July 2026 – 30 June 2027)	Last full FY where new disposals get the full 50% discount on the whole gain.	If you were planning to sell within 5 years anyway, this window is your best tax outcome.
30 June 2027 (Wed)	Last day to settle a sale under the legacy 50% discount regime.	Contract date alone won’t do it — settlement must happen by 30 June 2027. Solicitors and conveyancers will be busy.
1 July 2027	Reform start: cost base indexation + 30% minimum tax kick in.	If you sell on or after this date AND owned the property before, the split rules apply. If you bought after, you’re under the new regime entirely.
1 July 2027	Pre-1985 (pre-CGT) property becomes CGT-able for the first time.	If you’ve owned the property continuously since before 20 September 1985, you’ll need a 1 July 2027 valuation as the starting cost base for any future sale.
1 July 2027 onwards	New-build 15-year carve-out clock starts.	If you buy a brand-new residential build on or after this date and hold it 15 years as the first owner, you keep the 50% discount.
31 October 2028	First tax return capturing a reform-period disposal.	Self-lodgers filing for 2027-28 will be the first to use the new rules. Tax agent extensions apply normally.
1 July 2042	First new-build 15-year exemption windows mature.	Investors who bought new builds on day-one of reform can realise the 15-year carve-out.

How time changes your tax bill

Property is uniquely sensitive to timing because most investors don’t flip — they hold for 7–15 years, often longer. Under the reform, your tax bill isn’t decided by a single date. It’s decided by three time-driven levers that interact:

1. Holding period straddling 1 July 2027 — drives the legacy/reform split. The longer you owned the property before the changeover, the bigger the slice of your gain that keeps the 50% discount.
2. Years past 1 July 2027 at sale — drives how much CPI indexation lifts your cost base on the reform portion. The longer you hold post-reform, the more inflation gets sheltered.
3. The property’s growth rate — interacts with both. High-real-growth metros lose; slow-grow regionals can actually come out ahead.

Each lever moves on its own clock. Let’s walk through them.

Holding-period split — how much of the gain stays in the legacy bucket

The ATO splits your gain by days held before vs. after 1 July 2027. For a property bought on 1 July 2020 (seven years pre-reform), the legacy share shrinks the longer you hold past the changeover:

Sale date	Years owned	Legacy share	Reform share
1 Jul 2028	8 yrs	87.5%	12.5%
1 Jul 2030	10 yrs	70.0%	30.0%
1 Jul 2035	15 yrs	46.7%	53.3%
1 Jul 2040	20 yrs	35.0%	65.0%

Plain English: an investor who bought in 2020 and sells in 2028 still has 87.5% of their gain taxed under the friendlier legacy 50% discount. By 2035 they’ve crossed the midpoint — the reform portion is now bigger. By 2040 the legacy share is down to about a third. The legacy bucket fades but it never disappears entirely.

CPI indexation by years past reform

On the reform portion, your cost base gets uplifted for CPI from 1 July 2027 to the sale date. Assuming 2.5%/yr inflation (close to the RBA target midpoint), the cumulative cost-base uplift is:

Years past 1 July 2027	Sale year	Cost base uplift
3 yrs	2030	7.7%
5 yrs	2032	13.1%
10 yrs	2037	28.0%
15 yrs	2042	44.8%

Plain English: indexation compounds. A property sold five years after the reform shelters about 13% of the cost base from tax; one held 15 years past 1 July 2027 shelters nearly 45%. That’s a big offset against losing the discount — but only if the property hasn’t grown much faster than CPI.

Property growth rate sensitivity

This is where the picture diverges by suburb. Take a 10-year hold straddling 2027 (5 years pre-reform + 5 years post), with a $400,000 nominal gain at a 37% marginal tax rate. Run it through three growth-rate scenarios:

Scenario	Property type	Growth rate	Old-rules tax (37% MTR)	New-rules tax (37% MTR)	Diff
Sydney apartment	inner-city residential	7%/yr nominal	$74,000	~$83,000	+12%
Regional house	regional QLD/SA	4%/yr nominal	$74,000	~$66,000	−11%
Coastal holiday let	high-growth holiday market	9%/yr nominal	$74,000	~$92,000	+24%

Plain English: a regional rental in Wagga Wagga or Mount Gambier growing at 4%/yr could actually pay less tax under the new rules than the old. Why? Most of the gain is inflation, and indexation now shelters it. An inner-Sydney apartment at 7%/yr is the losing case — high real growth (real = above-CPI) means indexation barely helps and you’ve lost the 50% discount on the reform portion. A Byron Bay or Noosa holiday let at 9%/yr is the worst case; almost all the gain is “real” and the reform bites hardest.

Why property’s longer hold periods matter more

The ABS rental property survey puts average investor hold periods at 10–12 years for established residential property, vs. 3–5 years for shares. That longer hold cuts both ways:

• More years across 1 July 2027 = bigger reform share of the gain (working against you).
• More years for indexation to accumulate = bigger cost-base uplift on the reform portion (working for you).

The two effects partially offset for slow-growth regional property; they compound against you for fast-growth capital-city stock. Shares dropped into the reform straight away — most share investors will be wholly under the new rules within 5 years. Property investors are the cohort the before-and-after rules were really designed for.

Depreciation cost-base interaction (property-specific)

Property has one more time-driven wrinkle that shares and crypto don’t. Division 43 capital works deductions (building depreciation, typically 2.5%/yr of the construction cost over 40 years) reduce your CGT cost base by the cumulative deductions claimed. A property held 10+ years with full quantity-surveyor depreciation claimed each year can have a cost base $80,000–$150,000 below what you actually paid.

That matters here because:

1. A lower cost base inflates the nominal gain at disposal.
2. A bigger nominal gain gets split across the legacy/reform line — so both buckets grow proportionally.
3. The reform-portion tax is now applied to a bigger number, with the 30% minimum potentially binding for low-MTR holders.

In short: long-held depreciated properties have a higher sensitivity to the reform than the cost-base-on-paper suggests. The depreciation trap was always there; the reform makes it bite harder on the post-2027 portion.

Bottom-line summary by holder profile

• Owned the property 10+ years before 1 July 2027 and selling within 5 years after? Most of your gain stays in the legacy bucket. Reform impact small — single digits of extra tax, often.
• Bought 2024–2026 and selling 2032–2034? Reform portion dominates the split. For Sydney/Melbourne metro, expect 15–25% more tax than the old rules would have produced.
• Buying a brand-new build post-2027 and holding to the 15-year carve-out? You retain the full 50% discount under the new-build election — best of both worlds.
• Holding regional property at 3–4%/yr nominal growth? The reform may actually save you tax because indexation shelters more inflation than the 50% discount used to.

The reform isn’t a flat tax hike. It’s a time-and-growth-rate sensitive recalibration that favours slow-grow regional holders and new-build investors, and penalises fast-grow capital-city existing-stock holders most heavily.

What is exempt and what is caught

Still fully exempt — no change:

• Your principal place of residence under the main residence exemption.
• The 6-year absence rule — if you move out of your main residence and rent it out for up to 6 years without nominating another property as your main residence, the absence period still keeps the full exemption.
• Inherited main residences sold within 2 years of the date of death (deceased estate concession).
• The main residence partial exemption for a property that was once your home and later rented out (calculated based on how many days it was your home vs rented out).

Caught by the reform:

• Standalone rental properties (residential or commercial).
• Holiday homes that derive rental income (Airbnb, short-stay, traditional holiday lets).
• Vacant land held for investment, development, or future build.
• Properties held in a discretionary or unit trust, or as a partnership asset.
• The investment portion of a property that was previously your main residence and is now a rental — partial exemption still works on the main-residence years, but the post-1 July 2027 investor portion of the gain falls under the new rules.

The 12-month holding period requirement to qualify for any discount or indexation carries over from current rules.

The three-bucket transition for property

Treasury structures the transition into three buckets based on purchase date and sale date. Property investors will sit in one of three positions:

Bucket	Purchase date	Sale date	Treatment
A	Any	Before 1 July 2027	No change. 50% discount applies to the whole gain.
B	Before 1 July 2027	On or after 1 July 2027	Split treatment. Pre-changeover portion of the gain gets the legacy 50% discount; post-changeover portion is indexed and taxed at the greater of marginal rate or 30%.
C	On or after 1 July 2027	After 1 July 2027	Wholly new rules. Indexation plus 30% minimum across the full holding period. New-build election available (see Bucket C section below).

Most investors who own a property today will be in Bucket B if they sell after the changeover. The split is by days held, not by how much the property went up in each period. In plain English, the ATO splits your gain based on how many days you owned the property before vs after 1 July 2027. Own a property for 10 years across the changeover and sell two years after? Roughly 80% of your gain follows the old rules, 20% follows the new rules.

Add the worked examples below to see how each bucket plays out in dollars.

Bucket A — pre-reform sale worked example

Mark sells his investment unit on 30 June 2027 — the last possible business day before the new rules switch on. He bought the unit in Parramatta (NSW) for $580,000 in March 2014 and put in $30,000 of capital improvements over the years. His cost base (what he paid plus all his costs and improvements) is $610,000. He sells for $1,050,000 — a nominal gain of $440,000. Mark earns $120,000 salary, putting him at the 37% marginal tax rate.

Because the sale settles before 1 July 2027, Mark is squarely in Bucket A. The old rules apply to the entire gain:

• $440,000 × 50% discount = $220,000 taxable.
• $220,000 × 37% marginal rate = $81,400 CGT.

What this means for Mark: he locks in the 50% discount on the full gain. If he had held just one more day and sold on 1 July 2027, he would have been pulled into Bucket B and started paying the new rules on his post-changeover days. For owners who were already planning to sell in mid-2027, settling before 1 July 2027 (not after) preserves the better tax outcome.

The trap to avoid: contract date vs settlement date. CGT event A1 triggers on the contract date, not settlement. If Mark signed the contract on 28 June 2027 with settlement on 15 July 2027, his sale still falls into Bucket A — the contract date governs. Get this confirmed in writing with your conveyancer if you’re cutting it fine. Don’t rely on settlement timing.

Bucket B — before-and-after rules worked example

Sarah bought an investment unit in Brunswick (VIC) for $720,000 on 1 March 2018. Over the holding period she added $40,000 in capital improvements (kitchen renovation, structural waterproofing) and capitalised acquisition costs (stamp duty, conveyancing). After depreciation adjustments her cost base sits at $760,000. She sells the unit for $1,250,000 on 1 March 2031 — a 13-year hold and a nominal gain of $490,000. Her other taxable income in 2030–31 puts her at the 45% marginal rate.

Step 1: Split the gain by days held

The ATO splits the gain based on how many days Sarah owned the property before 1 July 2027 vs after. The total hold is 4,748 days (1 March 2018 to 1 March 2031). Of those:

• Legacy days (1 March 2018 to 1 July 2027) = 3,409 days = 71.8% of the hold.
• Reform days (1 July 2027 to 1 March 2031) = 1,339 days = 28.2% of the hold.

Applied to the $490,000 nominal gain:

• Legacy gain portion: $490,000 × 71.8% = $351,813.
• Reform gain portion: $490,000 × 28.2% = $138,187.

Sarah’s effective 1 July 2027 cost base (the implied valuation under the ATO’s day-based split formula) is $760,000 + $351,813 = $1,111,813.

She could instead obtain a formal property valuation as at 1 July 2027 if she expects that to be more favourable — the choice is made when she lodges the 2030–31 return. A sworn valuation by a registered property valuer typically produces a higher reform-start value if the area saw above-average growth in the years immediately before the changeover. That higher starting point means a smaller post-2027 gain, and less tax under the new rules.

Step 2: Tax the legacy portion under old rules

The pre-1 July 2027 share of the gain keeps the 50% discount:

• $351,813 × 50% discount = $175,907 taxable.
• At 45% marginal rate = $79,158 in tax.

Step 3: Tax the reform portion under new rules

The post-1 July 2027 share of the gain is indexed for CPI, then taxed at the greater of marginal rate or 30%. Assuming 2.5%/year CPI over the 3.67-year reform period gives a CPI ratio of roughly 1.095:

• Indexation uplift: $138,187 × (1 − 1/1.095) = $11,960 added to the cost base.
• Real reform gain: $138,187 − $11,960 = $126,227.
• Tax at 45% (her marginal rate is above 30%, so the minimum doesn’t bite): $126,227 × 45% = $56,802.

Step 4: Total and compare

Sarah’s total CGT on the sale is $79,158 + $56,802 = $135,960.

Compare the three scenarios:

Scenario	Taxable position	Total CGT
Old rules (50% discount on full $490k gain)	$245,000 taxable at 45%	$110,250
Before-and-after rules (actual — Bucket B)	$175,907 discounted + $126,227 real	$135,960
Pure new rules (hypothetical — if she’d bought 1 July 2027)	$447,489 real gain after ~9.5% indexation, at 45%	$201,370

What this means for Sarah: the before-and-after rules cost her $25,710 more than the unreformed pre-Budget rules would have. But they also save her $65,410 compared to having the entire 13-year gain thrown into the reform bucket. The longer the legacy portion of the hold, the closer Sarah’s outcome stays to “old rules” — which is the whole point of how the transition was designed.

This is the property-investor analogue of Treasury’s Jane example in the master article (a $800,000 asset held since 2022 and sold in 2032). Jane’s split is closer to 50/50 because she had a shorter legacy period; Sarah’s split heavily favours the legacy bucket because she held the property for almost 9.5 years before the changeover.

Bucket C — fresh post-2027 purchase worked example

Jess buys her first investment property — a 3-bedroom townhouse in Logan (QLD) — on 15 August 2028 for $650,000. She adds $15,000 in stamp duty and conveyancing to the cost base, so her starting cost base is $665,000. She rents it out for six years and sells on 15 August 2034 for $910,000. Jess earns $95,000 salary, putting her at the 30% marginal tax rate (she sits right on the threshold — the 30% minimum and her marginal rate are identical, so the minimum effectively binds).

Because she bought after 1 July 2027, Jess is fully in Bucket C. No legacy half exists; the whole gain is under the new rules.

Step 1: Index the cost base for CPI

CPI over the 6-year hold averaged 2.5% per year. The cumulative inflation factor is 1.025^6 = 1.1597, so prices rose ~16% over the hold. The indexation uplifts her $665,000 cost base:

• Indexed cost base: $665,000 × 1.1597 = $771,200.
• Indexation uplift (the inflation portion the ATO is now ignoring): $771,200 − $665,000 = $106,200.

Step 2: Compute the real gain

• Sale proceeds: $910,000.
• Real gain = $910,000 − $771,200 = $138,800.

Compare to the nominal gain ($910,000 − $665,000 = $245,000). About 43% of Jess’s nominal gain is just inflation — that portion is no longer taxed. This is the upside of the indexation half of the reform.

Step 3: Apply the 30% minimum

Jess’s marginal rate is exactly 30%, so the minimum and her marginal rate produce the same answer:

• $138,800 × 30% = $41,640 CGT.

What this means for Jess: her effective tax rate on the nominal $245,000 gain is $41,640 / $245,000 = 17%. Compare to the pre-reform world: 30% × 50% discount = an effective 15% on the nominal gain. Indexation almost — but not quite — fills the hole left by killing the 50% discount, for someone at the 30% marginal rate after a 6-year hold during average inflation. For higher-MTR or longer-hold investors, the math gets less favourable.

Bucket C — retiree on low income with the 30% minimum binding

Brian is a 68-year-old retiree living on the age pension plus a small superannuation pension. His total taxable income is $35,000 — most of which is offset by the seniors and pensioners tax offset (SAPTO), making his effective marginal rate around 16% (just income tax, before Medicare). He bought a small investment unit in Geelong (VIC) on 10 September 2028 for $450,000 with $20,000 of acquisition costs (cost base $470,000), planning to sell it to fund his late-70s nursing-home bond. He sells on 10 September 2036 for $680,000.

Step 1: Index the cost base

8-year hold at 2.5% CPI = inflation factor of 1.025^8 = 1.2184:

• Indexed cost base: $470,000 × 1.2184 = $572,648.
• Real gain: $680,000 − $572,648 = $107,352.

Step 2: Apply the 30% minimum (this is the key step)

If the old 50% discount rules still applied, Brian’s $210,000 nominal gain would have been:

• $210,000 × 50% discount = $105,000 taxable.
• Added to his $35,000 base income, most of the $105,000 would have been taxed in the 30% and 37% brackets, but the average effective tax rate on the gain (after his low base and offsets) would have come in around 22% — say $23,100 in CGT.

Under the new rules, the 30% minimum tax rate applies to the real gain regardless of his low marginal rate:

• $107,352 × 30% = $32,206 CGT.

What this means for Brian: the 30% minimum ratchets his tax up by roughly $9,000, even though his actual marginal rate is well below 30%. This is the design point of the minimum — it removes the ability to time a low-income year (e.g. retirement, parental leave, gap year) to access ultra-low CGT rates. Indexation does soften the blow somewhat (he isn’t taxed on the $102,648 inflation portion of his gain), but the 30% floor more than offsets the indexation benefit for low-income holders.

Translation: retirees and other low-MTR investors lose the biggest concession that property CGT used to offer them — the ability to sell in a low-income year and pay tax at sub-20% effective rates. Plan exits with this in mind. If Brian had sold one investment a year for 3 years before 1 July 2027 to crystallise gains under the old discount rules, his lifetime CGT bill on the same growth would have been materially lower.

Bucket C — new-build carve-out

Budget Paper No. 2 (p.21) preserves the 50% CGT discount for eligible new residential construction held by the first owner — explicitly designed to channel investor demand into new supply rather than existing stock.

Policy intent: Treasury’s stated objective is to lift housing supply by tilting the after-tax economics of new builds versus existing property. New-build investors get to choose, per disposal, between the legacy 50% discount and the new indexation + 30% minimum rules — picking whichever produces less tax. The election is per CGT event, so an investor with two new builds can choose differently for each.

What counts as eligible new-build (per BP2 and the paired negative-gearing measure):

• New residential construction with construction substantially completed on or after 1 July 2027.
• Held by the first taxpayer to use or rent the property after completion.
• The carve-out applies for the first 15 years of ownership by that first taxpayer. After 15 years the property reverts to the standard new rules (or the before-and-after rules if the 15-year mark falls during the hold).
• Includes off-the-plan apartments, eligible knock-down rebuilds, and vacant-land construction. Substantial renovations of existing dwellings do NOT qualify.

Investor decision point: the after-tax gap between buying existing stock and buying eligible new-build widens materially under the reform. For a $1m investment unit held 10 years with typical metro growth, the new-build carve-out can save $30k–$80k in CGT on the exit. Combined with the negative-gearing carve-out for new builds (see below), the policy stack tilts heavily towards new construction.

Cost-base interactions to watch

The before-and-after split uses the final cost base — what you paid plus your costs, calculated at sale time — not a snapshot cost base at 1 July 2027. That has practical implications:

• Depreciation deductions on the building still reduce your cost base (technically Division 43 capital works deductions). Every $1,000 of building depreciation claimed over the holding period reduces the cost base by $1,000 — which increases the nominal gain on both the legacy and reform portions proportionally. The depreciation trap is unchanged; if anything, it now bites harder because the reform portion of a higher gain is taxed at minimum 30%.
• Quantity surveyor reports remain valuable. Most property investors should still claim depreciation during the hold — the annual tax saving outweighs the CGT pull-back in nearly all cases, but the math is now closer. See the selling rental property CGT guide for the depreciation recapture mechanics.
• Capital improvements add to cost base for both portions. A $50,000 kitchen renovation done in 2025 adds $50,000 to the cost base at sale time, reducing the split gain in both the legacy and reform buckets pro rata. Track all renovation invoices, even decade-old ones.
• Selling costs (agent commission, legal fees, marketing) still reduce capital proceeds, which has the same effect as a higher cost base. No change.
• The 12-month rule still applies. Held for less than 12 months at sale = no discount on legacy portion AND no indexation on reform portion. Same penalty for short holds as today.

Negative gearing reform interaction

Budget 2026 also restructured negative gearing for residential property — see Negative Gearing Reform Budget 2026: What Changed by Purchase Date for the full breakdown. The combined effect on a property investor’s hold-and-sell horizon is material:

• During the hold: tighter rules on offsetting net rental losses against salary income for existing-stock acquisitions made after the reform date.
• At sale: the CGT reform either trims the exit discount (Bucket B/C existing stock) or preserves the 50% discount (new-build election).

The two reforms point the same way: the after-tax case for buying existing investment property has weakened, while the case for new construction has strengthened. Long-time landlords sitting on legacy stock are largely insulated because the before-and-after rules preserve the old 50% discount on most of their gain. Net-new investors making purchase decisions in 2026 and 2027 face a different calculus than the one that drove buy-and-hold investing for the past two decades.

Pre-CGT property (acquired before 20 September 1985)

For the first time since CGT was introduced in 1985, pre-CGT property becomes taxable on the portion of gain accruing after 1 July 2027. BP2 p.21 is explicit: the reform applies to “all CGT assets, including pre-1985 CGT assets, held by individuals, trusts and partnerships.”

Practical effect: if you (or a family trust) have held investment land or a commercial building continuously since before 20 September 1985, you previously had a pre-CGT asset that escaped CGT entirely. After 1 July 2027, you will need to:

1. Establish the property’s value at 1 July 2027 using either a formal valuation or the ATO’s day-based split formula.
2. Treat that 1 July 2027 value as the cost base for any future sale.
3. Pay tax under the new rules (indexation + 30% minimum) on any gain above that 1 July 2027 baseline.

The pre-1 July 2027 portion of any gain on a genuine pre-CGT asset remains exempt — only post-changeover growth is caught. For owners of long-held pre-1985 commercial sites or rural land with significant unrealised gain, this is a meaningful change and warrants a 2027 valuation booked early. See the CGT on inherited property guide for the pre-1985 rules as they currently apply to deceased-estate property.

Foreign-resident property owners

The reform applies to foreign residents the same way as Australian residents — there is no foreign-resident carve-in or carve-out. Existing settings continue:

• The CGT main residence exemption denial for foreign residents (introduced from 30 June 2019) is unchanged. A non-resident who sells a former Australian main residence generally pays CGT on the full gain (subject to limited inherited-property carve-outs).
• The 12.5% foreign resident capital gains withholding on property sales above $750,000 continues at the contract stage. This is a withholding mechanism, not a final tax — the foreign vendor’s actual liability is reconciled on the tax return using the new before-and-after rules.
• Foreign-resident vendors don’t qualify for the 50% discount on the legacy portion of a Bucket B sale either (this has been the case since 8 May 2012). Their entire legacy portion is taxed without discount, and their reform portion is taxed under indexation + 30% minimum.

See Non-Resident CGT: The 80% Tax Myth for the broader non-resident CGT picture.

Planning levers between now and 1 July 2027

The 14-month window before the changeover gives investors several legitimate levers — but each carries trade-offs that need to be modelled before acting.

1. Realise gains before 30 June 2027 only if the sale makes sense regardless of tax. The 50% discount is materially better than the before-and-after rules for most metro investment properties.

But a $80,000 stamp duty hit on a replacement purchase, plus agent commission, plus capital gains tax due immediately rather than several years out, often outweighs the discount preservation. Run the numbers in the CGT Calculator before deciding.

2. Lock in capital improvements before sale. A renovation completed in 2026 lifts the cost base for both the legacy and reform portions of the eventual gain. If a renovation was planned anyway, doing it before sale (rather than after acquisition by the next owner) keeps the cost in your CGT cost base.

3. Loss harvesting still works. Capital losses still apply before the discount/indexation mechanics, so a $50,000 capital loss on a poorly performing investment offsets $50,000 of nominal gain on a property sale. The relative value of carried-forward capital losses is somewhat higher under the new rules because the post-loss gain attracts less discount. See the CGT Harvest Calculator for loss-harvest candidate ranking.

4. Subdivision and development trigger separate CGT events. Splitting a single title into multiple lots, or developing a held property for resale, both trigger CGT events at the point of subdivision or development completion (separately from the eventual sale of the lots). These events may straddle the 1 July 2027 changeover in complex ways and warrant professional advice.

5. Trust-held property follows the same rules as individual-held property. The reform applies equally to property held by discretionary trusts, unit trusts, and partnerships. There is no structural avoidance available by moving existing property into a trust before the changeover — the asset’s acquisition date determines the bucket, not the holding entity. (Companies were never eligible for the 50% discount and are unaffected by the reform either way.)

Calculators that handle the new rules

Three calculators on this site model the reform directly:

• Capital Gains Tax Calculator — the core CGT engine. Enter acquisition date, sale date, cost base, sale price, and marginal rate. The engine applies the Bucket A/B/C logic automatically and shows the before-and-after split breakdown.
• Investment Property Calculator — full rental cashflow modelling from purchase through sale, including hold-period deductions, depreciation, negative-gearing reform interaction, and the new CGT rules at exit. Useful for end-to-end return modelling on a hypothetical purchase.
• CGT Harvest Calculator — ranks unrealised capital losses across your portfolio for best-use offsetting against an expected property gain.

Sources

• Treasury Budget Paper No. 2, Tax Reform — Boosting Home Ownership measure (p.21), 12 May 2026.
• Treasury fact sheet: Negative Gearing and Capital Gains Tax Reform (12 May 2026).
• ATO transitional guidance on cost base splitting (forthcoming PCG, expected June 2027).
• Master article: 50% CGT Discount Reform: Cost Base Indexation + 30% Minimum Tax from 1 July 2027 — cross-asset overview, Jane/Zoe/Jack worked examples from Treasury, and 20-year discount-equivalent table.

Related reading

• Negative Gearing Reform Budget 2026: What Changed by Purchase Date — paired property reform.
• Selling Rental Property: CGT Guide Australia — current rules and depreciation recapture mechanics.
• CGT on Inherited Property Australia — deceased-estate cost-base rules.
• EOFY Property Investor Checklist 2025–26 — annual tax-time actions.
• Budget 2026 Explained: Winners and Losers — full Budget breakdown.