CGT Changes — What It Means For Your Property
Treasury has flagged the capital gains tax discount as on the table for the 2026 budget. The leading proposal: drop the 50% discount and index the cost base at inflation, like the pre-1999 rules. This tool models what that swap does to a typical $600k investment property — adjust the dials and watch your breakeven move.
About the new rules
Announced in the Federal Budget on 12 May 2026 and commencing 1 July 2027. The 50% CGT discount is replaced with cost-base indexation at CPI, and a 30% minimum tax floors the rate on real capital gains — so the effective rate is the higher of your marginal rate and 30%. Anything contracted before 7:30pm AEST on 12 May 2026 is grandfathered indefinitely. Investors in new builds can elect either the old 50% discount or the new regime at sale, so this tool picks whichever is cheaper for them. Toggle "Build type" to compare.
The Property
Gross yield: 4.68%
New-build investors can elect old or new CGT rules at sale; established are stuck with the new rules from 1 Jul 2027.
You
Used to compute your marginal tax rate on the capital gain
Headline year — the chart shows all 30 years
Your assumptions
Annual nominal capital growth
Rate used to index the cost base under the new regime
If you sold after 10 years
Old rules — 50% discount
$175k
CGT bill: $77k
From 1 Jul 2027 — indexation + 30% min tax
$252k
CGT bill: $0
At these assumptions, the new rules leave you $77k better off — your nominal growth is close enough to inflation that indexing the cost base saves more tax than the 50% discount, even with the 30% minimum-tax floor.
CGT delta: -$77k · marginal rate at sale ≈ 37% · 30% min-tax floor does not bind at this income
After-tax walk-away wealth, by sale year
What you keep after CGT, sale costs, the mortgage, and net of all cash you put in.
Year
Y10
Current rules
$175k
Proposed
$252k
Year 10 breakdown
Where the difference shows up, line by line.
| Current | Proposed | |
|---|---|---|
Net sale price (after agent + legals) | $951,290 | $951,290 |
Cost base New: original cost grown at CPI | $623,125 | $797,653 |
Capital gain New shows real (above-CPI) gain only | $328,165 | $153,638 |
Taxable gain Old applies 50% discount; new taxes full real gain | $164,083 | $153,638 |
CGT bill | $77,052 | $0 |
Mortgage balance at sale | $395,520 | $395,520 |
Cash you put in (cumulative) | $303,749 | $303,749 |
Walk-away wealth | $174,969 | $252,021 |
Assumptions and limits
- Uses Australian tax brackets for 2025-26 plus a 2% Medicare levy. No surcharges, offsets, or HECS considered. The Budget's bottom-bracket cuts (16% → 15% in FY26-27, → 14% from FY27-28) and the $250 WATO are not modelled — they make a marginal difference to the CGT bill at modest income bands.
- The new regime is applied to the whole hold period for simplicity. Strictly, for purchases settled before 1 July 2027 the old 50% discount applies to growth up to that date and the new indexation + 30% minimum tax applies to growth after. The headline numbers approximate this by treating the entire hold under one regime; the directional answer doesn't change but the dollar values would be slightly kinder under a precise apportionment.
- The 30% minimum tax is applied at the real-gain level. Income-support recipients are exempt per BP1 BS4 — that exception isn't modelled here.
- Negative gearing changes (new rental losses on established properties quarantined to property income from 1 July 2027) are not modelled in the year-by-year cashflow — those use the unchanged property-calc engine. For most investors the CGT effect dominates the NG effect over a 10-year hold, but at high LVR with persistent rental losses the gap narrows.
- Mortgage modelled as 30-year P&I at the default investor rate for your LVR; rental, expenses, and depreciation use the same engine that powers the property calculator.
- The indexation rate is your CPI assumption — the RBA's 2-3% target band is a sensible starting range, but it's a forecast, not a fact. Slide it up or down to see how a higher-inflation or lower-inflation decade changes the result.
- CGT is calculated on a single sale; partial-year apportionment for mid-cutoff acquisitions isn't modelled.
- Not financial advice. Run your numbers past an accountant before deciding anything.
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