By Stephanie Marshall, Harcourts Wellington Point
What’s Happening?
Capital gains tax is now a key issue for property investors as price growth and Federal Budget changes affect selling decisions.
Stephanie Marshall from Harcourts Wellington Point said many investors only think about capital gains tax when they are close to selling.
“Capital gains tax is now front of mind for property investors following confirmation Federal Budget changes announced on 12 May 2026, which will reshape how gains are taxed from 1 July 2027,” Ms Marshall said.
The changes mean investors may need to review their timing, tax position and long-term plans before deciding to sell.
Why It Matters
Capital gains tax can have a major effect on how much profit an investor keeps after selling a property.
In Australia, capital gains tax is not a separate tax rate. It is generally added to taxable income and taxed at the seller’s marginal rate.
Ms Marshall said this means the final tax bill can vary from one investor to another.
Income, ownership period and personal circumstances can all affect the result.
The 50 per cent CGT discount has long been a key part of property investment planning. From 1 July 2027, it will be removed and replaced with an indexation method.
That method adjusts the cost base for inflation, instead of applying a flat 50 per cent discount.
“The current 50 per cent discount remains available up to 30 June 2027, seller activity after this date may mean gains will be taxed under the new indexation method,” Ms Marshall said.
By the Numbers
- 50 per cent is the current CGT discount generally available to investors who have held a property for more than 12 months.
- $100,000 in capital gain could mean $50,000 is added to taxable income if the current discount applies.
- 1 July 2027 is when the indexation method will replace the current 50 per cent discount.
Local Impact
For local property investors, the issue is becoming more practical than theoretical.
Ms Marshall said some investors are starting to think about selling earlier. This may help them avoid competing with more sellers later.
The window to benefit from the full 50 per cent discount is closing. Investors who sell before 30 June 2027 can still access it in full.
“Those who hold beyond that date will move to the indexation method for any gains accrued after 1 July 2027,” she said.
Ms Marshall said too many investors listing at once could increase competition and soften prices.
At the same time, tight stock levels in many areas continue to support prices. This gives current sellers a stronger position than they may have later.
Zoom In
Ms Marshall said investors should treat property as a long-term investment, not a quick decision.
“Property is a long game,” she said.
The family home is also an important part of the conversation.
In most cases, a principal place of residence is exempt from capital gains tax. However, investors should speak to an accountant before moving into a property or selling.
Zoom Out
The CGT changes come alongside confirmed changes to negative gearing.
Existing investors are grandfathered, meaning negative gearing continues on properties already owned before 12 May 2026.
For new purchases after that date, negative gearing will only apply to newly built properties.
Investors who purchased existing dwellings after 12 May 2026 can still claim negative gearing losses until 30 June 2027.
Ms Marshall said investors should not treat the current discussion as a reason to panic.
“It’s not a case of panic selling, it’s about being strategic,” she said.
She said good advice could make a real difference, especially when deciding whether to sell now or wait.
For first-time investors, the message is to plan for capital gains tax from the start. That means buying a quality asset with growth potential and making sure it can be held long term.
What To Look For Next?
With the Federal Budget now delivered and the changes confirmed, investors should review their short-term and long-term goals.
The key dates are 30 June 2027 and 1 July 2027. The first marks the last opportunity to access the full 50 per cent CGT discount. The second marks the start of the indexation method and the end of pre-1985 asset exemptions.
“It’s not something to fear, but it is something to understand,” Ms Marshall said.
