Capital Gains Tax on Investment Property Australia — Complete Guide
How capital gains tax works when you sell an investment property in Australia. Covers the 50% CGT discount, cost base, main residence exemption, and the legislated 2027 CGT changes.
Frequently Asked Questions
How is CGT calculated on an investment property in Australia?
CGT is calculated as: sale price minus cost base (purchase price plus buying costs, improvement costs, and selling costs) = capital gain. If you owned the property for more than 12 months, you can apply the 50% CGT discount, halving the taxable gain. The discounted gain is added to your income and taxed at your marginal rate.
What is the 50% CGT discount in Australia?
If you own an asset for more than 12 months before selling, you can reduce your capital gain by 50%. For example, a $200,000 capital gain becomes a $100,000 taxable gain. The discount applies to individuals and some trusts, but not companies.
What costs can I include in my CGT cost base?
Your cost base includes: the original purchase price, stamp duty and conveyancing costs, building and pest inspections, agent commissions on sale, capital improvement costs (not repairs), and borrowing costs. It does not include expenses already claimed as tax deductions.
Are CGT rules changing?
Yes — but not until 1 July 2027, and not for the return you lodge now. For 2025-26 and 2026-27, the 50% CGT discount still applies as normal. From 1 July 2027, Parliament has legislated to replace the 50% discount for individuals, trusts and partnerships with two changes: cost-base indexation (you are taxed only on gains above inflation) and a 30% minimum tax rate on gains accruing after that date. Companies never received the discount and are unaffected by its removal. Key carve-outs are retained: new residential dwellings and affordable housing can still choose the 50% (up to 60%) discount, and the four small-business CGT concessions continue — with the small-business 50% active-asset reduction now available up to $10 million aggregated turnover. The detail is genuinely complex, so confirm your situation with a registered tax agent before acting.
I already own shares or an investment property — what happens on 1 July 2027?
Under the legislated rules, assets you hold on 30 June 2027 are treated as if sold and immediately reacquired at market value on 1 July 2027. Gains that built up before that date stay under the current rules (including the 50% discount if you are eligible); gains that build up after are taxed under the new indexation-plus-minimum-tax system. Your main residence remains exempt throughout. Nothing is triggered until you actually sell, but because the split is based on value at 30 June 2027, timing and record-keeping around that date matter — get advice specific to your assets.