The Capital Gains Tax Changes, Explained

The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026. It is law, not a proposal, and it does two separate things to property investors.

One changes how losses on a negatively geared property are treated. The other changes how a capital gain is taxed when you sell.

They have different start dates, different mechanics, and, critically, different treatment of people who already own property. Almost every confusion about this legislation comes from treating them as one announcement.

The sentence to hold onto: the negative gearing change is grandfathered, and the capital gains tax change is not.

Until 30 June 2027 the existing rule stands. An individual who has held an asset for more than 12 months discounts the gain by 50% and pays tax on the remainder at their marginal rate. Nothing about that has changed yet.

From 1 July 2027 the discount is replaced, for individuals, trusts and partnerships, by two things working together.

The first is cost base indexation. Rather than halving the gain, the cost base is uplifted to account for inflation over the holding period, so what is taxed is the real gain rather than the nominal one. On an asset held through a period of high inflation that can be generous; on one held briefly through low inflation it is not.

The second is a minimum tax rate of 30% on the real capital gain. That is a floor, so a taxpayer whose marginal rate would otherwise produce a lower effective rate on the gain pays 30% on it instead.

Recipients of the Age Pension and JobSeeker are excluded from the minimum rate. New builds may elect either treatment.

This is the most consequential misunderstanding on the topic, and it is being actively repeated.

During a review of this material on 3 September 2026, a search engine summary stated that properties held before 12 May 2026 are exempt from the capital gains tax change. That is wrong, and it is wrong in a way that would cost someone real money if they planned around it.

The 12 May 2026 grandfathering attaches to negative gearing. There is no equivalent grandfathering for capital gains tax. The CGT change applies to gains accruing from 1 July 2027 whenever they are realised, regardless of when the asset was bought.

The reason the error is easy to make is that both dates come out of the same Budget and the same Act, and the negative gearing side genuinely does protect existing owners. It just protects them from a different thing.

If you own an investment property today, plan on the basis that the CGT change will reach the part of your gain that accrues after 1 July 2027.

The word doing the work in the legislation is accruing, and it is the reason a banner saying the rules change on 1 July 2027 would be misleading.

The change does not switch on when you sell. It attaches to when the gain arose. A property bought in 2019 and sold in 2030 has a gain that accrued partly under the old rules and partly under the new ones, and it is worked out in two parts.

So there is no clean before-and-after. Almost every long-held property sold after mid-2027 will straddle the date, and the practical question is not which regime applies but how much of the gain falls on each side of it.

This also disposes of a piece of advice circulating before the Act passed, which was to sell before the deadline to capture the discount. There is no deadline in that sense. Selling on 30 June 2027 captures the discount on the whole gain; selling later captures it on the part that accrued earlier.

Here is what we cannot tell you, and we would rather say so than produce a confident number.

The Act allows a taxpayer to elect, at lodgment, between a market valuation as at 1 July 2027 and an apportionment method. The apportionment formula itself, and the indexation reference periods it would use, have not been published in a citable form.

We have checked repeatedly. Deep ATO pages refuse automated access and return HTTP 403, the Federal Register serves only a table of contents for the relevant Schedule, and Treasury material describes the policy without publishing the arithmetic. That was still the position on 7 September 2026.

This is why our capital gains tax calculator shows you the share of your holding period that falls either side of 1 July 2027 and then stops. It deliberately prints no post-2027 dollar figure, because the only honest way to produce one today would be to invent the method.

When the ATO publishes, the calculator gains a second regime rather than being rewritten, and this page gets its worked example.

Not much that is dramatic, and be suspicious of anyone selling urgency around this.

Know your dates. The acquisition date decides your negative gearing position and it is the date the contract was entered into rather than the date of settlement. If you are close to 12 May 2026, confirm it with your accountant rather than assuming.

Keep your cost base records in order, because indexation makes them matter more than they used to. Purchase costs, stamp duty, capital improvements, and the selling costs you will eventually add all reduce the real gain. A cost you cannot substantiate is a cost you cannot claim, and that has always been true but the consequences grow.

If you were already considering selling in the next eighteen months for reasons of your own, the discount ending is a genuine input into the timing. If you were not, restructuring a long-term holding around a tax change whose arithmetic has not been published is not a plan.

And take advice specific to you. This page describes legislation; it does not know your marginal rate, your holding period or your other assets.