Capital Gains Tax Changes 2027: What They Mean for Investors

Negative gearing wasn't the only thing that changed in the 2026 Budget. The same reform package rewrote how capital gains tax works too, and unlike negative gearing, this one doesn't care when you bought. It cares when the gain happened.

That's the detail that trips people up. With negative gearing, owning before Budget night protects you. With CGT, it doesn't work that way — even long-term investors will have part of their eventual gain taxed under the new rules. Below is what actually changed, and three worked examples that cover where most people land.

A note on scope. This article covers individuals and trusts selling an asset like an investment property or shares in their own name. Companies, superannuation funds and life insurance companies aren't part of this reform — different rules already apply to them. If you're investing through one of those structures, this article isn't about your situation, and you'll want advice specific to it.

This is general information, not tax advice. Some of the calculation mechanics — exactly how a gain gets split between "old rules" and "new rules" portions — hadn't been finalised in detailed guidance as of this writing. Treat the worked examples below as illustrative, not a substitute for running your actual numbers with a registered tax agent.

One date does most of the work

There's really one date that matters here: 1 July 2027.

Before that date, the current system keeps running exactly as it does now — sell before then, and the existing 50% CGT discount applies to your whole gain, no matter how long you've held the asset.

From 1 July 2027 onward, the way gains are taxed changes. And critically, this applies going forward regardless of when you originally bought the asset. If you've owned a property since 2015 and sell in 2030, the portion of your gain that built up before July 2027 is expected to keep the old treatment, while the portion accruing after that date falls under the new rules. The government hasn't finished detailing exactly how that split will be calculated in every case, so the mechanics here are still worth confirming closer to any sale.

What the reform actually does

Right now, the 50% CGT discount is simple: hold an asset longer than 12 months, and only half your gain gets taxed. From 1 July 2027, that flat discount is replaced with two things instead.

The first is cost-base indexation — your original purchase price gets adjusted for inflation before your gain is calculated, so you're only taxed on the growth that's real, not the part that's just years of inflation showing up as a bigger number.

The second is a 30% minimum tax rate on the gain itself. This stops high-income earners from timing a sale into a low-income year — like the year after retiring — purely to pay less tax on a gain that was earned while they were on a much higher income.

There's one carve-out worth knowing: if you're buying a new-build or affordable housing property, you get to choose between the old discount method and the new indexed method when you eventually sell, whichever comes out better for you.

Your family home stays fully exempt either way, and existing small business CGT concessions aren't touched.

Scenario 1: you sell before July 2027

Mark bought an investment property in 2018 for $500,000. He sells it in early 2027 for $780,000 — a $280,000 gain. Because the sale happens before 1 July 2027, none of this reform touches him. He gets the full 50% discount, same as always, and pays tax on $140,000 of that gain at his marginal rate. Timing, in his case, is everything.

Scenario 2: you've held it for years and sell after the changes

Elena bought her investment property in 2016 for $450,000. She sells in 2031 for $850,000 — a $400,000 gain built up over 15 years, most of it before the rules changed. Under the expected approach, the portion of that gain that accrued before 1 July 2027 keeps the old 50% discount treatment. Only the growth from mid-2027 onward gets pulled into the new indexed-plus-30%-minimum system. She isn't grandfathered out of the changes entirely the way she would be with negative gearing — but she isn't fully exposed to them either, because most of her gain happened under the old rules.

Scenario 3: you buy and sell entirely under the new system

Tom buys a new-build apartment in 2028 and sells it in 2033. His whole gain falls after 1 July 2027, so there's no old-system portion to fall back on. But because it's a new build, he gets to choose at sale time: take the new indexed method, or stick with the familiar 50% discount, whichever gives him the better outcome. For established properties bought after the change, that choice doesn't exist — the new method is the only option.

So what do you do with this

If you're planning to sell before mid-2027, nothing here changes your maths.

If you're holding for the long term, don't assume you're either fully protected or fully exposed — most long-held assets will end up with a blended outcome, split at the July 2027 line.

If you're buying new, the flexibility to choose your CGT method at sale time is a genuine advantage worth factoring into new-build versus established comparisons — alongside the negative gearing difference covered in our other guide.

Run your own numbers

Our property investment cashflow calculator can help you model the rental income and holding costs side of an investment. For the capital gains side specifically, run any sale scenario past a registered tax agent once you're closer to selling — the exact mechanics of the pre/post-2027 split are still being finalised in ATO guidance.

Where to check the official rules

The two official references are:

• The ATO's guidance: Tax reform – Boosting home ownership – Reforming negative gearing and capital gains tax
• The Treasury / Federal Budget material: Budget 2026–27 – Tax reform

This article is current as at August 2026 and reflects the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which passed Parliament in June 2026, with the CGT changes applying to gains accruing from 1 July 2027. Confirm your own circumstances with a registered tax agent before acting.