How to Calculate CGT on Property in Australia (Worked Example, 2025–26)

Capital gains tax (CGT) on an Australian investment property comes down to one formula: capital proceeds minus cost base, then the 50% discount if you held it over 12 months, taxed at your marginal rate. This guide walks the method step by step, runs a full worked example, and answers the questions people ask most — including the tax on a $100,000 and a $500,000 gain.

CGT is not a separate tax. The discounted capital gain is added to your taxable income for the year of sale and taxed at your normal marginal rate plus the 2% Medicare levy. That single fact drives most CGT planning.

The formula

Capital gain   = Capital proceeds − Cost base
Taxable gain   = Capital gain × (1 − CGT discount)
CGT payable    = Taxable gain × your marginal tax rate

• Capital proceeds — what you receive on sale, minus selling costs (agent commission, marketing, legal fees).
• Cost base — purchase price plus acquisition costs (stamp duty, conveyancing, buyer's agent) plus capital improvements, minus any capital works (Division 43) depreciation you've claimed.
• CGT discount — 50% for individuals and trusts holding the asset more than 12 months; 33⅓% for SMSFs in accumulation phase; 0% for companies.

Step by step

Step 1 — Work out your capital proceeds

Start with the sale price and subtract the costs of selling:

• Real estate agent commission
• Marketing and styling
• Conveyancing and legal fees on the sale

Step 2 — Work out your cost base

Add up every eligible cost of acquiring and improving the property:

• Purchase price
• Acquisition costs — stamp duty, conveyancing, buyer's agent, building and pest inspections
• Capital improvements — renovations, extensions, a new kitchen (not repairs, which are deducted against rent during the hold)
• Less Division 43 depreciation already claimed — capital works deductions reduce your cost base, which increases the eventual gain

Step 3 — Subtract to find the gross capital gain

Capital proceeds − Cost base = capital gain. A negative number is a capital loss, which can only offset other capital gains (now or carried forward), never your salary.

Step 4 — Apply the CGT discount

Held more than 12 months as an individual or trust? Halve the gain. The 12-month clock runs from contract date to contract date, not settlement.

Budget 2026 note: For assets acquired from 7:30pm AEST on 12 May 2026, the 50% discount is replaced from 1 July 2027 with cost base indexation plus a 30% minimum tax. Assets you owned on 12 May 2026 are grandfathered and keep the 50% discount. See CGT Discount Changes 2026 for the detail.

Step 5 — Add to your income and apply your marginal rate

The discounted gain is added to your other taxable income for the year. The 2025–26 resident marginal rates:

Taxable income	Marginal rate
$0 – $18,200	0%
$18,201 – $45,000	16%
$45,001 – $135,000	30%
$135,001 – $190,000	37%
$190,001+	45%

Add the 2% Medicare levy on top for most earners. Because the gain stacks on top of your income, a large gain can push part of it into a higher bracket — so model it against your actual income, not a single flat rate.

A full worked example

You bought an investment unit and have now sold it:

Item	Amount
Purchase price	$600,000
Stamp duty + conveyancing	$32,000
Capital improvement (renovation)	$40,000
Cost base	$672,000
Sale price	$900,000
Selling costs (agent, legal)	$25,000
Capital proceeds	$875,000

Step 3 — Capital gain: $875,000 − $672,000 = $203,000

Step 4 — Held 4 years (>12 months), individual → 50% discount: $203,000 × 50% = $101,500 taxable gain

Step 5 — Tax: Assume your other income already sits in the 37% bracket. The $101,500 is taxed at roughly 37% + 2% Medicare = 39%, giving CGT of about $39,585.

Had you sold at 11 months (no discount), the full $203,000 would be taxable — roughly $79,170 of tax. The 12-month hold saved about $39,600. That single threshold is the most valuable lever in property CGT.

Quick answers: $100,000 and $500,000 gains

• $100,000 gain, held >12 months, individual: halved to $50,000 taxable. At 37%+2% ≈ $19,500; at the top 45%+2% ≈ $23,500.
• $500,000 gain, held >12 months, individual: halved to $250,000 taxable. Mostly in the top bracket ≈ $117,500 at 47% — but it spans several brackets, so model your actual income.

Where estimates and reality diverge

This method gives the right order of magnitude. The actual figure also depends on:

• Prior-year capital losses you can offset
• Indexation if you bought before 21 September 1999
• Partial main residence exemption if you lived in the property then rented it
• The 6-year absence rule (not a "7-year rule") for a former home
• Ownership structure — SMSF (33⅓% discount, 15% rate) or company (30%, no discount) change the maths entirely

For anything beyond a straightforward individual sale, confirm with a registered tax agent before you exchange contracts.

Run your own numbers

Our CGT projection calculator does every step above — cost base, the 50% discount, SMSF and company ownership, your marginal rate — and compares the current 50% discount against the new Budget 2026 indexation regime side by side. It's free and embeddable on broker and accountant websites.

For the cashflow side of holding the property before you sell, see the negative gearing calculator.

Frequently asked questions

The FAQs above cover the most common CGT-on-property questions. For the full Budget 2026 changes — grandfathering, the 1 July 2027 cut-over and negative gearing limits — read CGT Discount Changes 2026.

This article is general information, not tax advice. CGT depends on your full financial position — consult a registered tax agent.