From 1 July 2027, capital gains on Australian investment properties will be split into two periods. Growth accrued before that date keeps the current 50% CGT discount. Growth accrued after it is instead indexed for inflation and taxed at a 30% minimum rate. For most existing investors, this means the bulk of their gain to date remains protected, only future growth is taxed under the new rules.
Sarah and Tom are typical of many My Wealth Solutions clients in their mid-30s: two solid incomes, a mortgage on the family home, and one investment property bought when the market felt like it only moved in one direction. They’re not property moguls — they bought once, in 2021, and let the property tick along, with rent covering most of the loan and the tax question left for “down the track.”
That plan became more urgent the week the federal budget landed. Capital gains tax changes were suddenly everywhere, and Sarah and Tom found themselves doing what many investors did that week: recalculating whether they were facing a much larger tax bill than expected.
| Detail | Figure |
|---|---|
| Purchase year | 2021 |
| Purchase price | $650,000 |
| Current value | $820,000 |
| Assumed sale year | 2030 |
| Assumed sale value | $950,000 |
They weren’t planning to sell any time soon, but the budget announcement left them wondering what the proposed changes could mean for their long-term investment strategy.
If Sarah and Tom sell in 2030 at an assumed value of $950,000, their total gain is $300,000. Under the proposed changes, that gain is split at 1 July 2027:
For comparison, if they sold today under current rules, the tax on the same pre-2027 gain would be around $39,950. Selling now to avoid the new rules would mean giving up $130,000 in future growth to save roughly $36,000 in extra tax.
| Scenario | Taxable Gain | Estimated Tax |
|---|---|---|
| Sell today (current rules, pre-2027 gain only) | $170,000 (50% discount applied) | ~$39,950 |
| Sell in 2030 (post-2027 rules apply from 1 July 2027) | $85,000 + $78,000 | ~$76,600 |
Sarah and Tom are in a better position than the headlines suggested. The key point: their pre-2027 growth, the majority of their total gain, is protected under the existing 50% discount. The new rules only apply to growth that happens after 1 July 2027.
For a couple who were convinced they’d need to rethink their whole strategy, the reality is far less dramatic: the property they bought is still doing what it was always meant to do.
Getting ahead of tax law changes early is one of the simplest capital gains strategies available. Professional advice can help you work through:
Every property, every ownership structure, and every timeline is different. If you’d like to see what these changes could mean for you, book a complimentary and confidential discovery session with one of our My Wealth Solutions advisers.
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Will CGT changes be grandfathered in Australia? Yes. Under the current proposal, gains accrued before 1 July 2027 keep the existing 50% CGT discount. Only gains accrued from that date onward move to the new cost base indexation and 30% minimum tax approach — effectively grandfathering pre-2027 growth under the current rules.
When will the CGT changes happen? The changes are proposed to take effect from 1 July 2027. Properties held at announcement (7:30pm AEST 12 May 2026) will be exempt from the negative gearing changes.
Are there any CGT exemptions that still apply? Yes. Existing CGT exemptions, such as the main residence exemption, are not affected by this change. The reform is specifically targeted at the discount method used for investment assets like investment properties.
This case study is illustrative and based on a composite client scenario. It does not constitute personal financial advice. Figures are estimates based on the proposed 2027 CGT changes as at the date of publication and may change. Speak with a My Wealth Solutions adviser about your own circumstances.
Cory has been an adviser since 2016. He specialises in providing goals-based advice with a holistic approach, and enjoys seeing his clients achieve their financial goals and feels privileged to be part of their success.
Dip. FP, Grad. Dip. FP
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