Property investing
Capital gains tax for investors
The current 50% discount, what replaces it from 1 July 2027, the main-residence six-year rule, and CGT withholding at settlement.
- The 50% CGT discount still applies in full to any gain accruing before 1 July 2027.
- From 1 July 2027, it's replaced — for non-new-build assets — with cost-base indexation plus a 30% minimum tax on the real gain, applying broadly to shares too, not just property.
- A sale after 2027 of an asset owned before it splits the gain into a pre- and post-2027 portion, each taxed under a different method.
- Your main residence stays CGT-exempt, including for up to six years after you move out and rent it — unaffected by any of these reforms.
- Since 1 January 2025, every Australian property sale is subject to 15% CGT withholding unless the vendor provides a clearance certificate — not just sales by foreign residents.
The 50% discount, today
If you hold a CGT asset — including an investment property — for at least 12 months before selling, you can currently reduce your taxable capital gain by 50%. This discount was introduced in 1999 and applies to individuals, trusts and partnerships. (Australian Government Treasury, verified 11 Aug 2026) It applies in full to any gain that accrues before 1 July 2027, and — for investors who buy an eligible new build (see the negative gearing guide for the exact definition) — it keeps applying indefinitely as one of two choices available to them at sale, alongside the replacement mechanism below.
What replaces it from 1 July 2027
For gains accruing after 1 July 2027, on assets other than an eligible new build, the 50% discount is replaced with two mechanisms together: cost-base indexation using the Consumer Price Index (the same style of inflation adjustment that applied between 1985 and 1999, before the flat 50% discount existed), plus a 30% minimum tax rate on the real, inflation-adjusted gain. (Australian Government Treasury, verified 11 Aug 2026) This applies broadly — to shares and other CGT assets held 12 months or more, not just property. The 30% figure is a floor, not an extra flat tax: if your marginal tax rate applied to the real gain would already be 30% or higher, the minimum tax has no further effect. It doesn't apply to widely held trusts (most managed investment trusts) or superannuation funds, including SMSFs. Recipients of means-tested income support — the Age Pension, JobSeeker — are exempt from the minimum tax in any year they receive a payment.
If you already own the asset when the rules change
Nothing happens just from holding an asset through 1 July 2027 — there's no CGT impact until you actually sell (a realisation basis). When you do sell an asset (other than a new build) you owned before that date, the gain is split into two portions for tax purposes. (Australian Government Treasury, verified 11 Aug 2026) The portion that accrued before 1 July 2027 still gets the old 50% discount treatment, based on what the asset was worth at that date (either a professional valuation or an ATO-provided apportionment formula using the asset's growth rate over its holding period). The portion accruing after that date is taxed under the new indexation-plus-minimum-tax method, using the 1 July 2027 value as the new cost base. In practice this means a long-held property sold well after 2027 is genuinely more complex to calculate than either the old or new system alone — budget for professional help with the calculation, not just the decision to sell.
The main residence exemption and the six-year rule
Your home is generally fully exempt from capital gains tax while you live in it, and none of the 2026-27 reforms above change that. (Australian Taxation Office, verified 11 Aug 2026) It matters here because of what happens if you move out and rent your former home: you can keep treating it as your main residence — fully CGT-exempt — for up to six years after you move out, as long as you don't treat any other property as your main residence at the same time. If you don't rent it out at all after moving out, that exemption can continue indefinitely on the same condition. This is genuinely relevant to "accidental" investors — someone who bought a home to live in and later decided to rent it out rather than sell, rather than someone who set out to invest from the start.
CGT withholding when you sell
Separately from the tax you actually owe, foreign resident capital gains withholding (FRCGW) affects how the sale settles. For contracts signed from 1 January 2025, it applies to every Australian property sale at a flat 15% of market value — the previous $750,000 minimum-value threshold has been removed. (Australian Taxation Office, verified 11 Aug 2026) Unless the vendor is an Australian tax resident with a valid ATO clearance certificate provided at or before settlement, the purchaser must withhold 15% of the price and remit it to the ATO — meaning every Australian resident seller, not just foreign ones, now needs to obtain a clearance certificate to receive their full sale proceeds without this withholding. If you're planning to sell an investment property, arrange the clearance certificate well before settlement.
Practical checklist
Before you sell an investment property
- Work out whether your gain (or the relevant portion of it) accrued before or after 1 July 2027, since the calculation genuinely differs
- If you're an Australian resident vendor, arrange your ATO clearance certificate before settlement to avoid 15% being withheld from your proceeds
- If the property was ever your main residence, check whether the six-year rule reduces or eliminates the taxable gain
- Get a professional CGT calculation rather than estimating it yourself, especially for any sale spanning the 1 July 2027 transition
Questions for a professional
- How much of my capital gain accrued before versus after 1 July 2027, and what's my estimated tax under each method?
- Do I qualify for the main-residence exemption or the six-year rule on this property?
- What do I need to provide to obtain a clearance certificate before settlement?
Official resources
- ATO: Tax reform — Boosting home ownership — Reforming negative gearing and CGT
- ATO: Treating former home as main residence
- ATO: Foreign resident capital gains withholding overview
Sources and methodology
- Negative Gearing and Capital Gains Tax Reform | Budget 2026-27 — Australian Government Treasury (retrieved 11 Aug 2026)
- Tax reform – Boosting home ownership – Reforming negative gearing and capital gains tax | ATO — Australian Taxation Office (retrieved 11 Aug 2026)
- Treating former home as main residence | Australian Taxation Office — Australian Taxation Office (retrieved 11 Aug 2026)
- Foreign resident capital gains withholding overview | Australian Taxation Office — Australian Taxation Office (retrieved 11 Aug 2026)
Figures on this page are drawn from Delora's local knowledge graph, refreshed from these primary sources and checked for changes on a regular schedule. If a figure here looks out of date, the official source above is always the authority — please let us know.