What is capital gains tax?
CGT is the tax on the profit from selling an asset, including property — Australian investors get a 50% discount on the taxable gain when the asset has been held longer than 12 months, and the principal place of residence is exempt entirely.
Capital gains tax (CGT) applies to the profit (sale price minus cost base) on the disposal of assets in Australia. For property investors, the cost base includes purchase price + stamp duty + legal fees + capital improvements + selling costs — these all reduce the taxable gain.
The 50% CGT discount is the key concession: hold the property longer than 12 months and only half the gain is taxed at your marginal income tax rate. A $200,000 gain by a top-bracket investor (47%) is therefore taxed at $200K × 50% × 47% = $47,000, effectively 23.5% of the gain.
The principal place of residence (your home) is fully CGT-exempt under the main residence exemption, provided you've lived there continuously. The 6-year rule lets you keep the exemption for up to 6 years if you move out and rent it, as long as you don't claim CGT exemption on another property over the same period.
CGT · capital gains tax discount · property capital gains tax
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General information only — not personal financial advice. Verified against https://ratesniffers.com.au/glossary on 2026-06-01.