CGT Overhaul: What Property Investors Need to Know Before 2027

Labor’s CGT reform replaces the 50% discount with indexation and a 30% minimum tax from July 2027 — here’s what it means for your investment property.

The biggest CGT shake-up in 25 years

New data from the Australian Taxation Office, reported by MPA Australia, puts into sharp relief just how much is at stake when the Albanese government's capital gains tax overhaul takes effect in July 2027. In the 2023–24 tax year, individual Australians alone reported $40.6 billion in net capital gains — up from $37.8 billion the previous year — with real estate the single largest source of those gains. Super funds recorded $43 billion in net capital gains, a 144 per cent surge from 2022–23, while companies posted $19 billion. Across all entity types, total net capital gains reached $102 billion in 2023–24.

Against that backdrop, the government’s decision to scrap the Howard-era 50 per cent CGT discount — introduced in 1999 — and replace it with inflation-adjusted cost-base indexation from 1 July 2027 is the most significant change to how investment gains are taxed in more than a quarter century. A minimum 30 per cent tax rate on realised capital gains will apply at the same time. The New South Wales state treasury estimated the broader CGT discount has cost the federal budget approximately $23 billion annually in foregone revenue in recent years.

The combined CGT and negative gearing reforms — which restrict negative gearing on residential property to new builds from the same date — are expected to raise $3.6 billion over four years, per government data. Combined with changes to discretionary trust taxation, the total rises to approximately $8.1 billion.

What changes, and what doesn’t

Here is the practical upshot for property investors.

**If you sell an investment property before 1 July 2027**, the existing rules still apply. You access the 50 per cent CGT discount on assets held for more than 12 months, which halves your taxable gain. This is your last window to operate under the existing regime.

**From 1 July 2027**, instead of halving your nominal gain, you will be able to adjust your cost base for inflation — but a minimum 30 per cent tax rate will apply to whatever remains. For properties with a low cost base that have appreciated well ahead of inflation, indexation may deliver a smaller benefit than the current 50 per cent discount.

Negative gearing also changes on the same date. If you hold an established investment property where rental income does not cover interest and running costs, you will no longer be able to offset those losses against your salary or other income. That offset is being restricted to new-build properties only.

Together, these two changes fundamentally alter the risk-return equation for established residential investment properties. Anyone currently holding — or considering buying — an established investment property needs to model the numbers under the new regime before committing to a strategy. Use our [borrowing power calculator](/calculators/borrowing-power) to stress-test your serviceability under changed negative gearing assumptions, or [browse investor loan options](/home-loans/investor) to see where rates currently sit.

Small business owners get a meaningful carve-out

The government announced one significant piece of good news within the overhaul. Following intense industry advocacy — including submissions from the Mortgage and Finance Association of Australia (MFAA) to a Senate Economics Legislation Committee inquiry — Prime Minister Anthony Albanese confirmed that the CGT concession threshold for small businesses would be lifted fivefold, from $2 million to $10 million in annual turnover.

MFAA chief executive Anja Pannek welcomed the decision: “This is a positive outcome that will give many small business owners greater confidence to invest, grow, plan for succession and make long term decisions about their future.”

The Council of Small Business Organisations Australia (COSBOA) estimated the change directly benefits approximately 180,000 businesses with annual turnover between $2 million and $10 million. Treasurer Jim Chalmers confirmed that approximately 2.7 million active small businesses would now have access to CGT concessions under the revised settings. The 50 per cent active asset discount applies in addition to any other concessions when business assets are sold.

Chalmers denied the announcement was a backflip, describing it as “the outcome of the consultation that we flagged in the Budget papers themselves.”

What investors and borrowers should do now

The changes do not take effect until July 2027, which means you have time to plan — but that window will pass quickly. Here is where to focus.

**Review your property portfolio now.** If you hold established investment properties with significant unrealised gains, model your tax position under both the old and new rules at different potential exit dates. This is a conversation to have with your accountant in 2026, not 2027.

**Stress-test your cash flow under a changed negative gearing world.** If your current portfolio strategy relies on rental losses offsetting other income, that changes for established properties from July next year. Run the numbers on what your position looks like without that offset, and assess whether refinancing to a lower rate would close the gap. The [refinance savings calculator](/calculators/refinance-savings) can help you quantify what a rate reduction would be worth on an ongoing basis.

**Don’t act solely to avoid the 2027 change.** Selling now to lock in the existing CGT regime triggers a tax event immediately. Whether that is better or worse than the new regime depends on your cost base, holding period, and marginal tax rate. Model it with your accountant before taking any action.

**Keep an eye on [cheapest available home loans](/home-loans/cheapest).** The RBA kept the cash rate unchanged at 4.35 per cent at its June meeting — following three increases earlier this year — so borrowing costs remain elevated. Reducing your rate now could meaningfully improve your cash flow position ahead of the 2027 regime change.

The ATO data makes plain that property is the dominant engine of individual capital gains in Australia. The government is explicitly reshaping the incentives around it. Understanding what changes in July 2027 — and what does not — is now a central part of any property investment plan.

[Source: MPA Australia](https://www.mpamag.com/au/news/general/how-much-capital-gains-tax-do-aussies-pay/579535)