CGT Discount Changes 2027: What Property Sellers Need to Know

Published August 2026

If you’re holding an investment property in NSW, or thinking about purchasing an investment property in NSW, a change to the CGT discount calculation, that’s now law, is worth understanding well before you think about acting. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 passed both houses of Parliament on 25 June 2026 and received royal assent on 26 June 2026. From 1 July 2027, it replaces the 50% capital gains tax (CGT) discount that’s applied to individuals, trusts and partnerships since 1999 with a cost base indexation model and a new 30% minimum tax rate. Although this post is framed around property, , not just real estate, including shares, ETFs, managed funds and cryptocurrency. This post explains what’s changing, how the transition works for property you already own or are about to buy, and what it means for the timing of a purchase or a future sale.

What About My Main Residence?

Your main residence exemption is unaffected. The reform is aimed at investment and other CGT assets, and principal residences remain fully exempt from CGT. This is relevant to sellers of investment properties, not to a straightforward sale of your own home.

What’s Changing?

Since 1999, individuals, trusts and partnerships who’ve held a CGT asset, including an investment property, for more than 12 months have been able to disregard 50% of the capital gain when working out their tax. From 1 July 2027, that discount is removed and replaced with a return to the pre-1999 system: cost base indexation.

Under indexation, rather than automatically excluding half the gain, your original purchase price (plus eligible costs) is adjusted upward for inflation (CPI) before the gain is calculated. Only the “real,” inflation-adjusted gain is taxed, not the full nominal gain, but not half of it either.

How Cost-Base Indexation Works

Indexation changes the shape of the calculation rather than applying a flat discount. As an illustration, a property bought for $1,000,000 and sold five years later for $1,500,000 might have an indexed cost base of roughly $1,130,000 at a modest inflation rate, meaning the taxable gain becomes around $370,000, rather than the full $500,000 nominal gain. Whether that leaves you better or worse off than the old 50% discount depends heavily on how long you’ve held the property and how much inflation has moved in that time. There’s no single answer, which is exactly why this is worth modelling with your accountant well before you list.

The 30% Minimum Tax Rate

Alongside indexation, a 30% minimum tax rate applies to the post-reform portion of capital gains from 1 July 2027, regardless of your marginal tax rate for that income year. In practice, this mainly affects people in tax brackets below 30%, for example, those planning to sell in a lower-income year, such as a career break, early retirement before pension age, or a stay-at-home parent. Under the old rules, timing a sale for a low-income year reduced the tax payable; under the new rules, the 30% floor limits how much benefit that timing strategy provides.

There is a welfare exemption, but it’s narrower than “exempt from the changes”: recipients of specified payments, including the Age Pension, JobSeeker and Disability Support Pension, are exempt from the 30% minimum tax specifically. That is, they would pay tax at their marginal tax rate (whatever that may be), but they still lose access to the 50% discount, and their gain is still calculated under indexation. It’s an exemption from the floor, not a full carve-out from the reform.

Grandfathering: What Happens to Property You Already Own?

This is the part that matters most if you’re currently holding an investment property, and the rules turn on two separate dates: when you bought the property, and when you sell it.

If you acquire the property before 1 July 2027 and sell it after that date, your gain is split into two portions. The portion that accrued before 1 July 2027 still receives the 50% discount, unchanged. The portion that accrues from 1 July 2027 onward is taxed under the new indexation model and the 30% minimum rate.

If you acquire the property on or after 1 July 2027, there is no pre-reform portion to split out. The entire gain, from purchase to eventual sale, is taxed under the new indexation and 30% minimum tax rules, with no 50% discount available at all. So yes, there is a hard cutoff: to access any benefit of the old 50% discount, you need to already own the property before 1 July 2027. New residential dwellings are the one exception to this cutoff: for a new-build purchase, whenever it’s acquired, investors can elect either the discount or indexation model on the full gain, whichever proves more favourable. That election is only available for new residential dwellings, not for established property.

For property held across the transition date, the law treats it as a deemed disposal and reacquisition at 1 July 2027, so you’ll need to establish the property’s value as at that date, either through a formal valuation or an apportionment formula based on historical growth rates. Getting a formal, documented valuation around that date, rather than relying on the apportionment formula, is worth considering: one detailed industry analysis of the final legislation notes it’s “far cheaper to secure that evidence now than to reconstruct it at a sale in the 2030s”, and that if too much of the gain ends up attributed to the post-1 July 2027 period by default, you face more exposure to the new indexation and 30% minimum tax regime than a documented valuation might otherwise support.

This Is Now Law, Not Just a Budget Proposal

Because this started life as a 2026 Federal Budget announcement, it’s worth being clear that it’s since passed Parliament and been assented into law as the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Act No. 49 of 2026), alongside the related Income Tax Rates Amendment (Tax Reform No. 1) Act 2026. The Senate did make a number of amendments to the original May 2026 Budget proposal before passage, including hardcoding the welfare exemption list into the legislation itself rather than leaving it to ministerial discretion, and lifting the small business active-asset threshold. We’ll keep this post updated if the ATO issues further guidance ahead of 1 July 2027. As always, we’re conveyancers, not tax advisers: this post is general information, not advice, so please talk to your accountant about how this applies to your specific situation.

What This Means for Your Settlement Timing

If you’re weighing up buying or selling an investment property before or after 1 July 2027, the earlier you start that conversation with your accountant, the more options you have around settlement timing, including planning now for the formal valuation you’ll need to obtain at the 1 July 2027 transition date, for any property you already hold. As your conveyancer, we can work with you and your accountant on settlement timing once you’ve decided on a course of action, whichever side of the transaction you’re on.

Thinking about buying or selling an investment property, or want to talk through timing? Get in touch, we’re happy to have that conversation alongside your accountant.

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