What is Being Proposed?
- Under Budget 2026-27 proposals, a minimum tax rate of 30% would apply to real capital gains accruing from 1 July 2027. This means that any gain on disposing of real assets (like property) from that date onward must be taxed at least at 30%, regardless of other offsets. �. (community.ato.gov.au)
- For assets held before 1 July 2027, gains accrued up to that date remain under the current rules (including the 50% discount), but any portion accruing afterward will be subject to the new minimum rate rule. (community.ato.gov.au)
How This Impacts Property Investors
| Scenario | Current Rules | Under New Proposal |
|---|---|---|
| You bought property in 2016 and sell it in 2028 | Entire gain subject to 50% discount, taxed at marginal rate | Your pre-1 Jul 2027 accrual is discounted; all accruals after that are taxed at minimum 30%, even if your marginal rate is lower. |
| Marginal rate < 30% | You benefit | You’d pay additional tax to reach 30% on real gains from 1 Jul 2027 onward. |
Practical Example
Suppose Mark bought a rental property in 2020. He plans to sell in 2028. The total capital gain is made up of components accrued up to 30 June 2027 and those after. He enjoys 50% discount for the pre-July 2027 part; from 1 July 2027 onward, any real gain portion must be taxed at at least 30%—so if his marginal rate is 25%, the proposal forces him to pay more.
“Real gain” typically adjusts for inflation, but only for the post-July 2027 accrual. Stamp duty, acquisition costs, etc., still apply.
What You Can Do Now to Plan Effectively
- Assess timing of any major asset disposals. Selling before or after 1 July 2027 has big tax implications.
- Document purchase date, cost base, improvements, holding period carefully—so you can apportion gain between pre- and post- accrual periods.
- Consult with a tax advisor to estimate how this change might affect your capital gains tax liability. This matters even more if your marginal tax rate is below 30%.
Is It Already Law?
- No. These changes are proposed in the Budget 2026-27 and not yet enacted. Investors should monitor the passage of legislation and any amendments made before becoming law.
Summary Takeaway
If enacted, the minimum 30% tax on real capital gains will significantly shift the tax landscape for property investors—particularly those with assets acquired before 2027. Early planning, good record-keeping, and careful timing of transactions can help reduce unwelcome surprises.