Should You Sell Before 1 July 2027? The CGT Discount Changes, Explained

Published 19 September 2026 · Reviewed 18 September 2026 · Law status as at that date is set out below; exposure-draft components may change.

Who This Is For

You own an investment property with a gain in it and have heard that the 50% capital gains tax discount ends on 1 July 2027. This guide is for the decision that follows. It covers what the enacted law does on that date, why for most owners it is a valuation date rather than a sale deadline, the situations in which the date genuinely changes the answer, what a sale costs in the current market, and a records checklist for the nine months to 30 June 2027.

Scope. This guide addresses Australian-resident individuals holding property directly, with notes on trusts. Foreign and temporary residents are subject to separate conditions in the Act (sections 115-105, 115-110 and 115-120) and are outside the deemed-sale rule described here; they need separate analysis. Complying superannuation funds and companies are largely unaffected and are covered briefly.

This is general information, not personal tax, financial or credit advice. Confirm your position with a registered tax agent before acting.

The 30-Second Answer

Source: Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (No. 49, 2026), Schedule 1: Subdivision 112-E, Division 119, s 115-100. Our summary.

Two dates, two reforms

The two are separate schedules of the same Act and do not interact mechanically. A property can be on the old side of one line and the new side of the other.

What Actually Happens on 1 July 2027?

Step one: a deemed sale. Just before 1 July 2027 you are taken to have sold the property. The Act's note is explicit that the sale happens on 30 June 2027 and the reacquisition on 1 July 2027.

Step two: nothing is payable. The notional gain is disregarded in 2026-27. There is no assessment, payment or election.

Step three: two amounts at the real sale. In the year you actually sell you bring to account a deferred gain (the 30 June 2027 value less your original cost base, taxed as a discount capital gain under the rules you know today) and a post-2027 gain (your sale proceeds less the 30 June 2027 value, with that reset cost base indexed for CPI from 1 July 2027 and the result subject to the 30% minimum tax).

Step four: how the 30 June 2027 number is set. Section 112-155(3) makes market value just before 1 July 2027 the default. It also allows a taxpayer to choose an apportioning method if the Minister has determined one by legislative instrument under s 112-185. As at 18 September 2026 no instrument has been registered; Treasury's exposure draft is discussed below under its own label. Any choice is made in the return for the year you sell (s 103-25), so nothing is decided in 2027, but you do need to be able to prove market value if you intend to rely on it.

Three categories of gain therefore emerge for a property investor from 1 July 2027:

1. Gain accrued before 1 July 2027 on a qualifying asset: deferred, discount treatment preserved.
2. Gain accrued after 1 July 2027 on that asset: CPI-indexed real gain, 30% minimum tax.
3. Gain on an eligible new residential dwelling or affordable-housing asset: its own regime, with a 50% discount continuing on later growth.

Does an Eligible New Build Keep the 50% Discount?

This exception matters for property investors. The Act's guide text is direct: for a discount capital gain from a CGT event on or after 1 July 2027, “a discount of at least 50% continues to be available if the CGT event relates to a new residential dwelling or to the provision of affordable housing.” Because these assets keep discount treatment on later growth, they are excluded from the deemed sale in s 112-155(1)(e); there is no need to split their gain at 30 June 2027.

Two consequences follow. First, an investor holding an eligible new dwelling has no CGT-driven reason to sell before 1 July 2027 and no valuation-date exposure. Second, the choice between the 50% discount and indexation for these assets is a sale-year decision worth modelling both ways, because indexation wins when growth is slow and inflation-heavy and the discount wins when growth is fast.

Does Selling Before 1 July 2027 Save Tax on the Gain You Already Have?

Take the case we carry through this guide. A Sydney unit bought in October 2014 for $665,000, with $35,000 of stamp duty and legal costs, giving a cost base of $700,000. Cotality's August 2026 Home Value Index has Sydney dwelling values 7.1% below their February 2026 peak, so assume the unit peaked at about $1,075,000 and is worth $1,000,000 today.

Sell now, contract before 30 June 2027. All prices below are gross sale prices unless marked net.

Source: our illustrative modelling; 2026-27 resident rates; other income assumed above $190,000 so the whole gain sits in the top bracket; no other deductions or losses.

Hold. If the unit is still worth $1,000,000 on 30 June 2027, the deferred gain is $300,000 (selling costs belong to the eventual sale). When the owner sells in 2032, that $300,000 is a discount capital gain, halved to $150,000 and taxed at the 2032 marginal rate. That is the treatment the owner would have received by selling in 2027.

Two second-order differences exist. The lowest marginal rate falls from 15% to 14% on 1 July 2027, which is irrelevant above the 30% bracket. And a sale in a year of lower other income, such as the first year of retirement, can be taxed more lightly than a sale on a full salary. Both bear on the choice of sale year rather than on selling before the date. If you receive advice that the pre-1 July 2027 gain loses its discount, ask the adviser to identify the transitional provision that removes it; Subdivision 112-E does the opposite.

What Changes: The Tax on Growth After 1 July 2027

Indexation from the reset base. Section 110-36(1A) indexes each element of the cost base except element three (costs of ownership) by CPI, for assets held at least 12 months. The reset cost base is the 30 June 2027 value, so a property bought in 2004 gets indexation from mid-2027, not 23 years of it. Indexation cannot create or enlarge a capital loss.

The 30% minimum tax. Division 119 applies to Australian-resident individuals. Section 119-5 defines your minimum tax capital gain as your residential and non-residential capital gains (post-2027 accruals, after capital losses and after the s 102-5 method statement) less deductible gifts; deferred gains and new-dwelling and affordable-housing gains are excluded. Section 119-10 then multiplies that amount by 30%, works out how much of your ordinary income tax is attributable to it (your tax with the gain, less your tax if taxable income were reduced by the gain), and charges the shortfall as extra tax. It is a floor tested against your actual tax position. In practice a taxpayer whose attributable tax is already 30% or more pays nothing extra; one whose attributable tax is lower, because of a low marginal rate or because deductions have reduced taxable income, pays the gap. Section 119-15 switches the Division off for any income year in which you receive a listed payment; the list, in s 119-15(2) to (5) of the Act, includes the Age Pension, JobSeeker, Disability Support Pension, Carer Payment, Parenting Payment, Family Tax Benefit and a range of veterans' payments.

Where the crossover sits. Under the discount, tax is your rate on half the nominal gain. Under indexation, it is your attributable rate (at least 30%) on the gain above CPI. The two are equal when inflation is exactly half the nominal gain.

Illustrative break-even growth rates under these assumptions. Method: $100 reset cost base at 1 July 2027; CPI 2.5% a year (the RBA's August 2026 Statement on Monetary Policy has trimmed-mean inflation at 2.6% by December 2027); five-year hold to 30 June 2032; flat marginal rates including the 2% Medicare levy (47% = top bracket; 16% = 14% lowest bracket from 1 July 2027 plus levy); indexation of the full reset base from 1 July 2027; old method = rate × 50% × nominal gain; new method = max(income-tax rate, 30%) × real gain plus the 2% Medicare levy, which sits outside the s 119-10 comparison; no other deductions, losses or income-support payments. Bold marks the cheaper method in each pair. Solving for equality gives break-even nominal growth of about 4.8% over five years and 4.6% over ten for rates of 30% and above, and about 3.3% for the lowest bracket. Change any input and the figures move.

The pattern generalises: indexation rewards slow, inflation-heavy growth and penalises fast real growth. Australia ran a CPI-indexation regime from 1985 until the 1999 Ralph review replaced it with the 50% discount; the enacted method returns to it, with the minimum tax added. On the negative growth the major banks currently forecast for the next year or two, the new method is cheaper for anyone selling in the early 2030s having reset near a trough. On the 6% to 8% growth of 2020 to 2025 it is dearer. Which regime 2028 to 2035 resembles is unknowable.

Why the 30 June 2027 Value Matters More Than the Sale Deadline

The valuation-date effect. Your deferred gain runs from cost base to the 30 June 2027 value; your post-2027 gain runs from that value to your sale price. A low reset value moves dollars from the first bucket to the second. Whether that hurts depends on the crossover above.

How the draft formula could produce a different 2027 value. The exposure draft assumes the asset grew at a constant compounding daily rate from purchase to sale and uses that smoothed path to derive a notional 30 June 2027 value:

daily growth rate = (capital proceeds, i.e. gross sale price ÷ first element of cost base) ^ (1 ÷ days held) − 1
notional 30 June 2027 value = first element of cost base × (1 + daily growth rate) ^ days held to 30 June 2027

Treasury's own worked example (an artwork bought for $520,000 in 2016 and sold for $1,500,000 in 2034) apportions $471,430 of gain to the pre-2027 bucket and $316,161 to the post-2027 bucket, with the remaining $187,409 of the $975,000 gain (the $980,000 price rise less $5,000 of fees) removed by indexation. The formula assumes constant growth, so it cannot reflect a 2026-27 trough. Applied to our Sydney unit on the draft's terms (capital proceeds are the gross sale price of $1,137,875; selling costs enter the cost base), it produces a notional 30 June 2027 value of about $977,700 against an assumed market value of $935,250. That moves roughly $42,000 of gain from the indexed bucket to the discounted bucket and, because the indexed reset base then exceeds the net proceeds, leaves no post-2027 gain at all: CGT of about $65,300 against $74,037 on the market-valuation path, a difference of about $8,800 at 47% on our modelling. In a market that falls after 2027 the effect reverses and market value gives the higher 2027 number. This is scenario analysis on a draft instrument: the result depends on the final determination, on eligibility, on the inputs and on the eventual sale.

What to do about it now. Because any choice is made in the sale year, the practical instruction is documentary: retain the evidence needed to assess both approaches if an apportioning method is ultimately available. That means your original contract and cost-base records (the formula would use the first element of the cost base and the acquisition date) and evidence of market value at 30 June 2027.

The Full Worked Example: Sell Now Versus Hold to 2032

Every figure below traces to these inputs: cost base $700,000; peak $1,075,000 (February 2026); today $1,000,000 (18 September 2026); CommBank's Sydney peak-to-trough forecast of around −13% applied at 30 June 2027, giving $935,250; recovery at 4.0% a year compound for five years to 30 June 2032, giving a gross $1,137,875 (our assumption, and a generous one against CommBank's forecast of about 2% national growth over calendar 2027); selling costs 3.5% ($39,826), so net proceeds $1,098,049; CPI 2.5% a year for five years (factor 1.1314), so the indexed reset cost base is $1,058,150; marginal rate 47% throughout; no losses or deductions.

Source: our illustrative modelling, not a forecast. Deferred gain = $935,250 − $700,000. Post-2027 gain = $1,098,049 − $1,058,150. CGT (hold, valuation) = 47% × ($235,250 × 50% + $39,899) = $74,037. Counterfactual = 47% × 50% × ($1,098,049 − $700,000). Formula path uses the exposure-draft method with acquisition on 15 October 2014 and gross capital proceeds, and is included for comparison only. The path from $1,000,000 today to a gross $1,137,875 on 30 June 2032 is a compound rate of about 2.3% a year over 5.8 years.

The table shows three things: the 50% discount on the $235,000 to $278,000 of gain accrued to mid-2027 survives in every hold path; on this slow-recovery path the enacted method produces less tax than the old rules would have, because indexation removes inflation; and the two 2027 valuation approaches differ by about $8,800 for this owner.

Selling now and earning 3% a year after tax on $902,725 for the same 5.8 years produces about $1,071,000 by mid-2032, more than either hold path on tax and price alone. Adding rental income changes the comparison materially: $700 a week, about a 3.6% gross yield on $1,000,000, is roughly $36,400 a year before costs. The example does not model vacancy, tax on rental income, depreciation, land tax, repairs, financing costs or transaction timing, so it does not establish a hold or sell result. The CGT transition is a small variable in that decision, and the sensitivity below shows how small.

Source: our illustrative modelling, market-valuation path, all other inputs as above. The 17% bracket is the 15% rate plus the 2% levy; on the post-2027 gain Division 119 lifts the income-tax component to 30%, so that gain bears 32% in total. A negative effect means the enacted method produces less CGT than the old rules would have. In the 0% row the selling costs create a small post-2027 capital loss, which s 102-5 applies against the deferred gain before discounting, so the result equals the old-rules figure. The crossover for this owner sits between 4% and 6% a year, consistent with the illustrative break-even rates above.

Six Situations Where the Date Changes the Answer, or the Paperwork

1. A sale already planned for 2027 to 2029

Only the growth between 1 July 2027 and your sale is taxed differently. Over one or two years the dollar difference on a $1 million property is small: a 6% gain in the first post-2027 year is $60,000 nominal and about $35,000 real after 2.5% CPI, and the two methods differ by roughly $2,400 for a 47% taxpayer. Selling costs are incurred either way, and a forced pre-July sale into a market with 33 days on market and 3.9% vendor discounts (Cotality, September chart pack) may cost more than the tax difference. Our read is to sell when the property and the buyer are ready.

2. A low tax rate in the sale year

Where your ordinary tax attributable to a post-2027 gain is below 30%, Division 119 charges the shortfall. The retiree box above shows the mechanics. The NTAA has also identified a design issue worth demonstrating against the statute. Take an individual with a $100,000 post-2027 capital gain, $100,000 of non-quarantined rental losses (from a grandfathered negatively geared property) and no other income. Taxable income is nil, so ordinary tax is nil. But s 119-5 defines the minimum tax capital gain as the capital gains remaining after the s 102-5 method statement, reduced only by deductible gifts; rental losses are s 8-1 deductions and do not reduce it. Step 1: 30% × $100,000 = $30,000. Steps 2 to 4: tax with the gain, $0; tax without it, $0; attributable tax, $0. Step 5: shortfall $30,000, payable as extra tax on nil taxable income. Quarantined losses (s 26-155) behave differently because s 102-5 steps 3 and 4 apply them against the residential gains themselves. The NTAA has recommended an amendment; none has been made. If you are in this position and a sale within two or three years was already planned, model a pre-July sale, and note that a sale in a year you receive a listed income-support payment removes the floor for that year.

3. Capital losses you intend to realise

The amended s 102-5 method statement applies current-year capital losses in a fixed order (step 1): first against deferred non-residential gains, then deferred residential gains, then non-residential gains, then residential gains. It then applies carried-forward net capital losses in the same order (step 2). Today you can choose the order and most people apply losses to undiscounted gains first. From 1 July 2027 a loss is forced against your discounted deferred gain before it reaches an indexed gain, so each dollar of loss shelters 50 cents of taxable income instead of a dollar.

If you hold loss-making assets you intend to crystallise, realising them in the same year as a pre-July-2027 property sale preserves the choice.

4. Pre-CGT property

Property acquired before 20 September 1985 has been outside CGT. Section 112-175 deems it sold on 30 June 2027 and reacquired on 1 July 2027 at market value, with the gain to that date disregarded and only later growth taxable. There is no CGT reason to sell before the date, since the exempt gain stays exempt, but for the first time the 30 June 2027 number matters, and the NTAA notes a K6 trap for pre-CGT shares and trust interests.

5. Trusts and other structures

Trusts face the same deemed sale under ss 112-165 and 112-170, with the trustee giving beneficiaries the information they need (s 115-235, with penalties for late statements). Separately, Treasury's 3 September exposure draft proposes a 30% minimum tax on discretionary trusts from 1 July 2028 and has not yet been reconciled with the capital gains rules. Trust-held portfolios warrant a structure review before 2028. Companies never had the discount and sit outside indexation and Division 119, although company-held pre-1985 assets are still reset under s 112-175; complying super funds keep the one-third discount and are excluded from the deemed sale.

6. A post-12-May-2026 purchase with rental losses

An established dwelling contracted after 7:30pm on 12 May 2026 has its net rental losses quarantined from 1 July 2027. That is a cash-flow reason to reconsider holding and it has nothing to do with the CGT discount. Our transition plan covers it.

What Selling Costs in 2026

Source: OpenAgent, “What is the cost of selling a house in 2026”; state revenue office duty schedules as at September 2026 (approximate, verify); our totals. Illustrative for a $1,000,000 property; costs scale differently at other price points.

Set that against the tax stakes in the worked example: about $8,800 between the two 2027 valuation approaches, about $19,500 between the enacted method and the old rules on the slow-recovery path, about $9,400 from the loss-ordering rule on a $50,000 loss. In that example the transaction costs of acting are several times any of them, before the vendor discount accepted in a market with capital-city stock 24% above a year ago (Cotality, August 2026).

Who Should Do What

The RBA's May 2026 Bulletin, drawing on tax data for 2022-23 (the latest population-level dataset, not a 2026 headcount), counted 2.3 million individual housing investors with a median age of 51 and 28% aged over 60. Many will sell in or near retirement, when other income is lower and the Division 119 floor and the s 119-15 exemption can both be relevant.

Source: our analysis of the enacted Act and exposure drafts as at 18 September 2026. Income thresholds are illustrative labels for the marginal-rate circumstances described, not statutory tests. General information only.

What would change our view. Three things: an apportioning determination that excludes real property or is never made, which would remove the second valuation option; ATO guidance that accepts only formal valuations, which would raise the cost of the market-value route; and an extension of the proposed trust minimum tax to capital gains, which would change the trust analysis.

Your Records Checklist to 30 June 2027

The Bottom Line

For a qualifying asset held through 30 June 2027, the enacted transition preserves the discount on the gain accrued to that date, charges nothing on the day, and makes the 30 June 2027 value the dividing line for future growth. Selling before the date adds no discount to the gain you already have. What it does is stop future growth arising and fix the year and rate of tax, and in a market that Cotality's August index has falling for a fifth month it converts a paper decline into a realised one.

Three regimes now sit side by side: the pre-2027 gain under the old rules, the post-2027 gain under indexation and Division 119, and eligible new-dwelling and affordable-housing gains under their own discount provisions. The enacted method on post-2027 growth is cheaper than the discount if the next decade is slow and inflation-heavy and dearer if it is another boom. For a minority of owners the date is a real trigger: low-rate sellers, capital-loss holders, and trust and pre-CGT owners. For everyone else the decision to sell is a judgement about the property, its rent, its market and your alternatives, and the one thing every owner needs before 30 June 2027 is a defensible record of what the property was worth on that day.