Tax Planning
Navigating Australia’s CGT Reforms: What Property Investors Need to Know
Starting 1 July 2027, Australia introduces major changes to how capital gains are taxed — especially real capital gains on property, minimum tax rates, and negative gearing. Stay informed and plan ahead.
By NomadicTax Research Team • 6 min read • June 5, 2026
## 1. Recent Changes to Capital Gains Tax (CGT)
Australia’s 2026-27 Federal Budget introduced sweeping **CGT reforms**, which aren’t yet law but will start from **1 July 2027**. Key changes include:
- A **minimum tax rate of 30%** on “real capital gains” accruing from 1 July 2027. Assets held prior to that date are taxed under current rules for gains made before that date, and under the new rules for gains accrued afterward. ([community.ato.gov.au](https://community.ato.gov.au/s/question/a0JMo0000057pEH/p-00420353?utm_source=openai))
- The familiar **50% CGT discount** will still apply, but only to the portion of the gain accrued up to 30 June 2027. Accrued gains after that date use a fixed real capital gain framework plus minimum tax. ([community.ato.gov.au](https://community.ato.gov.au/s/question/a0JMo0000051pYfMAI/p00419654?utm_source=openai))
- Negative gearing rules are being reformed — only “eligible new builds” (including some knock-down rebuilds or substantial renovations that increase supply) will qualify. Existing properties or substantial renovations that **do not increase housing supply** will be excluded under the proposed rules. ([community.ato.gov.au](https://community.ato.gov.au/s/question/a0JMo0000055zcf/p-00420142?utm_source=openai))
## 2. Real vs Nominal Gains: How Cost Bases Change
- For assets held before 1 July 2027, their **value at that date becomes the new cost base** for future gains. Only gains accruing afterwards get the new treatment. ([community.ato.gov.au](https://community.ato.gov.au/s/question/a0JMo0000051pYfMAI/p00419654?utm_source=openai))
- Indexation (to adjust for inflation) will be used to calculate gains in the new system, reducing taxable real gain. For example, if you bought a property for $500,000 and its market value on 1 July 2027 is $700,000, gains are measured from $700,000 forward. Gains before that date are taxed under current rules. ([community.ato.gov.au](https://community.ato.gov.au/s/question/a0JMo0000051pYfMAI/p00419654?utm_source=openai))
## 3. Impacts on Investors & Examples
| Scenario | Outcome Under Old Rules | New Rules After 1 July 2027 |
|---|---|---|
| You bought house in 2016, sell in 2028 | 50% discount on full gain | Discount only on portion up to 1 July 2027; remaining gain taxed with 30% minimum rate and real gain basis |
| You do extensive renovations that increase housing supply | Negative gearing works | Only qualifies if 'eligible new build'; requires supply-increase condition |
*Example:* You bought a property in 2016 for $500,000. On 1 July 2027 it’s worth $700,000. You sell in July 2029 for $800,000. Under the new rules, gains on the first $200,000 (up to 2027) are taxed under the existing discount regime. The $100,000 gain after 2027 is scaled under the new real gain + 30% minimum tax rules. Negative gearing deductions post-2027 will depend on eligibility of the build.
## 4. What Should You Do Now?
- **Check your assets**: List those you own now that may generate capital gains after 1 July 2027.
- **Consider timing**: If you're planning to sell a large asset, it may be beneficial to realise gains before 1 July 2027 under existing rules.
- **Evaluate new property projects**: If building, renovating or replacing property, ensure it qualifies as an “eligible new build” under upcoming rules if you want negative gearing benefits.
- **Stay updated**: These reforms must become law, which involves drafting legislation and ATO guidance. Watch for exposures and draft rulings.
## 5. Actionable Insights & Planning Strategies
- Pre-July 2027, consult your accountant to possibly **pre-sell or restructure property holdings** to capitalize on the CGT discount.
- For property investors: model cash flows under both regimes to see effect of minimum tax rate and whether new build classification applies.
- If multiple properties, weigh gains across them — selling high gain assets before 1 July 2027 might reduce locked-in liabilities.
- Keep thorough records of valuations, improvements, and costs as at 1 July 2027 — basis points for all future CGT calculations.
These reforms mark a major shift for investors and homeowners. Early planning can reduce unexpected tax burdens and help you align your strategy with upcoming rules.