Should you sell before the 2027 CGT changes? It could be the literal million-dollar question. Labor’s May 2026 budget announcement means that from 1 July 2027, the 50% CGT discount is to be replaced with capital gains tax indexation and a 30% minimum tax.
Many everyday Australians who already hold property, and are indeed looking to purchase property, are overwhelmed with what these changes mean for them.
However, to ease the confusion, we have put together a real-life case study showing how holding an investment property may very well be the smartest move. Especially if you’re looking to one day retire on passive income in Australia from your portfolio.
When the federal budget introduced sweeping CGT changes which could impact pre-retirees, David and Karen started asking what a lot of long-term property owners have been asking, “Should I sell my investment property before the CGT changes or hold onto it?”
It’s an important question, and one this case study is built to answer for long-term investment property owners specifically. Understanding the Australian CGT discount changes announced in the 2026–27 Federal Budget matters most for investors exactly like them; smart, hard-working people sitting on large, long-held, unrealised gains – who are wondering if the clock is now working against them.
Here’s what we found when we ran the numbers:
| Detail | Figure |
|---|---|
| Purchase year | 2008 |
| Purchase price | $420,000 |
| Current value | ~$1.15 million |
| Years until retirement | 6–8 years |
| Scenario | Total gain | Taxable gain | Tax payable | Net proceeds |
|---|---|---|---|---|
| Sell before July 2027 (at $1,150,000) | $730,000 | $365,000 (50% discount applies) | $171,550 (at 47%) | ~$978,450 |
| Hold, sell in 2031 (at assumed $1,265,000, ~3% p.a. growth) | Pre-2027: $730,000 / Post-2027: $115,000 | $365,000 (same 50% discount) + near-zero (indexed cost base absorbs almost all of the $115,000) | ~$171,550 (same as selling now) | ~$1,093,450 |
By holding, David and Karen pay the same tax but keep an extra $115,000. That’s not an insignificant sum. Especially in today’s environment with rising costs and economic uncertainty
The good news is, for most long-term investment property holders, any large pre-2027 gain is protected. The CGT implications are generally greater for investors with relatively small pre-2027 gains and stronger future capital growth. For long-term property owners like David and Karen, selling before the changes solely because of the new CGT rules may not provide a significant tax advantage.
David and Karen don’t need to sell. But the next 12 to 18 months are still worth using well as part of a broader set of tax planning strategies. With just 6-8 years to go, it’s a crucial time to get financially set up and structured in the right way. Here’s what we’re recommending they do:
Every property, ownership structure, and timeline is different. If you’d like to see what these or similar changes could mean for you, go ahead and book a complimentary and 100% confidential discovery session with one of our My Wealth Solutions advisers.
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Will CGT changes be grandfathered in Australia?
Yes. Gains accrued before 1 July 2027 keep the existing 50% CGT discount, regardless of when the property is eventually sold. This means long-term holders like David and Karen don’t lose the benefit of decades of pre-2027 growth just because the sale happens after the cut-off.
When will the CGT changes happen?
The changes are proposed to take effect from 1 July 2027. Only gains accrued from that date forward are assessed under the new cost base indexation and 30% minimum tax approach.
Are there any CGT exemptions that still apply for pre-retirees?
Existing CGT exemptions, including the main residence exemption, are unaffected by this change. For investment properties, the reform only changes how the discount is calculated on gains made after 1 July 2027 it doesn’t remove any current exemptions.
Disclaimer: This article is provided for general information purposes only and does not constitute personal financial, tax, or legal advice. Any case studies or examples are illustrative only and are based on hypothetical or composite client scenarios. Any Capital Gains Tax (CGT) calculations, tax outcomes, or financial projections are estimates only and may not reflect your individual circumstances. Where financial projections are shown, they assume an annual investment growth rate of 3%, which is for illustrative purposes only and is not a guarantee of future performance. Tax laws and legislation may change over time, and investment markets can rise and fall. Before making any financial or tax-related decisions, you should seek advice from your accountant, registered tax agent, or licensed financial adviser to ensure the information is appropriate for your personal circumstances.
Hayden has worked in both corporate and self-employed roles including running a successful business. He joined the Financial Services industry in 2021, and became a Financial Adviser in 2023.
B. Business, Grad. Dip. Financial Planning
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