CGT Discount Changes 2026: Should You Sell Your Investment Property Before 1 July 2027?

From 1 July 2027, Australia's 50% capital gains tax (CGT) discount is replaced with cost base indexation plus a 30% minimum tax on the net capital gain. Investment properties you owned at 7:30pm AEST on 12 May 2026 are grandfathered under the existing rules. The new regime applies to assets acquired from 12 May 2026 onwards — with an opt-in choice for new builds.

This guide explains what changed in the 2026–27 Federal Budget, who is affected, how the new CGT calculation actually works, and — most importantly — how to decide whether to bring forward the sale of an investment property to lock in the 50% discount before the deadline.

The 5-second summary

• 50% CGT discount: continues until 30 June 2027. Replaced from 1 July 2027.
• New regime from 1 July 2027: cost base indexation + 30% minimum tax on the net gain.
• Grandfathering cut-off: 7:30pm AEST, 12 May 2026 (budget night).
• Assets owned on 12 May 2026: keep the 50% discount forever — even when sold after 1 July 2027.
• Assets bought after 12 May 2026: fall under the new regime when sold from 1 July 2027.
• New builds: investor can choose the 50% discount or the new indexation rules.
• Negative gearing: also limited from 12 May 2026 for established residential property — losses quarantined and carried forward against rental income only (see the negative gearing changes section below).
• Main residence exemption: unchanged.

What's changing on 1 July 2027

The 2026–27 Federal Budget contains the biggest CGT reform since the Howard government introduced the 50% discount in 1999. Three changes work together.

1. The 50% CGT discount is replaced

For assets held more than 12 months, the current rule is simple: include half the capital gain in your assessable income and pay tax at your marginal rate. From 1 July 2027, that 50% discount disappears.

In its place, two mechanisms apply:

Cost base indexation. Your purchase price is adjusted upward by the rate of inflation between the date you acquired the asset and the date you sell it. Only the real gain — above inflation — is taxed. This is a return to a system Australia used between 1985 and 1999, before the Ralph Review introduced the 50% discount.

30% minimum tax on the net gain. If your marginal rate would otherwise produce a lower effective tax on the indexed gain, a 30% floor kicks in. This stops the highest earners from paying lower effective rates than middle-income workers on the same gain.

2. Grandfathering — the 12 May 2026 line

Any CGT asset you owned at 7:30pm AEST on 12 May 2026 keeps the existing 50% discount, for the life of the asset. This applies whether you sell on 1 July 2027, 2030 or 2045. The grandfathering is permanent.

Crucially, it is a date-of-acquisition test, not a date-of-sale test. A property bought on 11 May 2026 and sold in 2032 is fully grandfathered. A property bought on 13 May 2026 and sold in 2032 falls under the new regime.

3. New builds get a choice

To support new housing supply, investors who purchase a new build after 12 May 2026 can choose, at sale, between the old 50% discount and the new indexation regime — whichever produces a better outcome for them.

This concession does not apply to established (existing) residential property purchased after 12 May 2026.

Who's grandfathered, who's not

The grandfathering rules are the single most important thing to get right. Many investors believe they need to act before July 2027 — the data says most do not.

Situation	CGT treatment on sale
Property owned on 12 May 2026	50% discount applies — grandfathered for life
Established property bought after 12 May 2026	New regime: indexation + 30% minimum tax
New build bought after 12 May 2026	Investor chooses old or new regime at sale
Main residence (any date)	Main residence exemption — unchanged
Asset held less than 12 months	No discount under either regime — full marginal tax
Superannuation fund — asset held on 12 May 2026	Existing 33⅓% discount preserved
Income support recipient	Exempt from the 30% minimum tax

Widely held trusts, complying superannuation funds, build-to-rent developments and properties supporting government affordable-housing programs are also excluded from various aspects of the new regime. If your structure is more complex than a standard individual or family-trust ownership, the answer needs your accountant.

A worked example: $200,000 capital gain compared

Consider an investor on the 37% marginal tax bracket who realises a $200,000 capital gain on an investment property held for 7 years. Assume average inflation over the holding period of 3.0% per year.

Under the current rules (sale before 1 July 2027)

• Capital gain: $200,000
• 50% discount: −$100,000
• Taxable gain: $100,000
• Tax at 37%: $37,000
• Net gain after tax: $163,000

Under the new rules (post 1 July 2027, non-grandfathered)

Assume the property was bought for $600,000 and sold for $800,000 (the $200,000 gain).

• Indexed cost base: $600,000 × (1.03)^7 ≈ $737,800
• Indexed gain: $800,000 − $737,800 = $62,200
• Tax at 37%: $62,200 × 0.37 = $23,014
• 30% minimum tax check: $62,200 × 0.30 = $18,660 (lower — not triggered)
• Tax payable: $23,014
• Net gain after tax: $176,986

What the comparison actually shows

In this scenario, the new indexation regime is better than the current 50% discount — by roughly $14,000 — because inflation has done most of the work and the real gain is modest.

Reverse the inputs and the answer flips. A property held for 3 years (less inflation accumulated), or one that doubled in price, produces a much higher real gain. In that case the 50% discount wins, sometimes by a wide margin.

The headline rule of thumb:

• Strong nominal growth, short holding period → 50% discount is better.
• Modest growth, long holding period → indexation is better.
• High inflation environment → indexation is better.

Run your specific numbers — switch the regime selector below to "Compare both side-by-side" to see which rules produce a better outcome for your property.

Should you sell your investment property before 1 July 2027?

This is the question the entire investor community is asking right now. The answer is more nuanced than the headlines suggest.

If you owned the property on 12 May 2026

You are grandfathered. The 50% CGT discount applies whenever you sell — there is no CGT reason to sell early. Other reasons (rental yield, market timing, portfolio rebalancing, lifestyle, refinancing) may still apply, but the budget changes are not one of them for you.

The one scenario where existing owners might consider acting: if you were already planning to sell within the next 5–7 years, and the new regime would have produced a worse outcome (e.g., short holding period with strong growth), bringing the sale forward locks in certainty. But the grandfathering alone is the protection — you do not lose anything by holding.

If you are about to buy

The decision is whether to rush a purchase before 12 May 2026 to capture grandfathering. That date has now passed for any reader of this article — settlements completed after 12 May 2026 fall under the new rules regardless of when contracts were signed (the budget night cut-off uses the contract date, not the settlement date, so contracts signed on or before 12 May 2026 are protected).

If you contracted to buy on or before 12 May 2026, you are grandfathered. If not, you are choosing between:

1. Buying an established property under the new rules — pay full marginal tax on the indexed gain, with the 30% minimum tax floor.
2. Buying a new build — keep the option to choose the 50% discount at sale.
3. Waiting — and reassessing once the legislation passes (currently scheduled for late 2026, with a 1 July 2027 commencement).

Most professional advice has converged on a fourth path: the structural advantage of a new build (negative gearing remains available until 1 July 2027, and the CGT discount choice is preserved) is now substantial. New supply is exactly what the government has tried to incentivise, and the tax code reflects that.

A decision framework

For a property already on the market and likely to sell well before July 2027, the budget changes are largely irrelevant — grandfathering protects you. For a property you've owned for less than 5 years with strong recent capital growth, modelling both regimes is worth the hour.

Ask three questions:

1. Holding period to expected sale. Longer = indexation typically wins. Shorter = the 50% discount typically wins.
2. Expected capital growth. Strong growth = 50% discount wins. Modest growth = indexation wins.
3. Marginal tax rate at sale. Top bracket = the 30% minimum tax floor may bite. Middle bracket = less impact.

Then put both numbers in front of your accountant — the difference is rarely small, and the new regime requires modelling your actual cost base, year-by-year inflation, and selling year.

What about negative gearing?

The CGT changes do not exist in isolation. The same budget also restricts negative gearing — and the two changes interact.

From 7:30pm AEST 12 May 2026:

• Established residential property acquired after that time cannot have its rental losses offset against your salary or other non-rental income. Losses are quarantined and carried forward to offset future rental income or property capital gains.
• New builds acquired after 12 May 2026 retain full negative gearing until 1 July 2027, after which the same quarantining applies.
• Properties acquired before 12 May 2026 are not affected — full negative gearing continues.

The combined effect on a post-12-May purchase of an established property is significant: losses don't reduce your salary tax, and any capital gain is taxed under the new indexation regime. For modelling the cashflow impact under the new rules, see our negative gearing calculator.

Try the CGT projection calculator

Our CGT projection calculator supports both the current 50% discount method and the new cost base indexation + 30% minimum tax regime. Switch the regime selector to "Compare both side-by-side" to see the outcome under each set of rules for your specific property — and whether grandfathering or the new regime delivers a better result.

The calculator is free, embeddable on broker and accountant websites, and updated as the legislation progresses through Parliament.

What happens next

The 2026–27 Budget measures still need to pass legislation. The expected timeline:

• May–November 2026: Treasury exposure drafts and consultation.
• Late 2026: Bill introduced to Parliament.
• First half 2027: Royal assent (subject to Senate support).
• 1 July 2027: New CGT and negative gearing rules commence.

There is political risk — the changes are contested, and minor amendments are likely. But the grandfathering date is fixed at 12 May 2026 in the announcement, which means it is already operative for behavioural purposes: any contract signed after that date is at risk of falling under the new rules regardless of when legislation passes.

We will update this article and the calculator as the draft legislation is released. For the latest version, bookmark this page or follow our calculator pages.

Frequently asked questions

Is the CGT discount changing in 2026? The 50% CGT discount itself does not change until 1 July 2027. From that date, for assets acquired from 7:30pm AEST 12 May 2026 onwards, the 50% discount is replaced with cost base indexation plus a 30% minimum tax on the net capital gain. Assets you owned on 12 May 2026 are grandfathered under the existing rules.

Will my existing investment property be affected by the new CGT rules? No. Investment properties you owned at 7:30pm AEST on 12 May 2026 are grandfathered. They keep the current 50% CGT discount, even if you sell after 1 July 2027. Only assets acquired from 12 May 2026 onwards (and new builds, with an opt-in choice) fall under the new regime.

Should I sell my investment property before 1 July 2027? Not automatically. Existing properties are grandfathered, so there is no CGT reason to sell early for assets you already own. The real question is whether to bring forward a sale you were already planning — which depends on your marginal tax rate, holding period, forecast capital growth, and selling costs.

What is replacing the 50% CGT discount? Cost base indexation — adjusting your purchase price upward by inflation — plus a 30% minimum tax floor on the net capital gain. The new regime starts 1 July 2027 and applies to individuals, trusts and superannuation funds. Income support recipients are exempt from the minimum tax.

Can I still negatively gear an investment property after May 2026? Only in specific circumstances. New builds remain eligible for negative gearing. Established residential properties acquired after 7:30pm AEST 12 May 2026 have their rental losses quarantined — losses can only be offset against future rental income or capital gains from residential property, not against your salary or other income. Properties acquired before 12 May 2026 are not affected.

Does the new CGT regime apply to shares as well as property? Yes. The change is to the CGT discount itself, which applies to all capital assets held for more than 12 months, not just property. Shares, managed funds, business assets and crypto held by individuals, trusts and super funds are all in scope from 1 July 2027 — subject to the same 12 May 2026 grandfathering rule for assets already held.

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This article provides general information current at 13 May 2026 and does not constitute personal tax, legal or financial advice. The measures discussed are announced government policy and may change before legislation is passed. Seek advice from a qualified accountant or financial adviser before making decisions about your investment property.