Updated 11 October 2026
From 1 July 2027 the 50 per cent CGT discount is replaced by cost base indexation and a 30 per cent minimum tax for individuals, trusts and partnerships. Assets held across that date are treated as sold and reacquired at market value, so most property owners will need a defensible 1 July 2027 value to split their gain.
At a glance
For individuals, trusts and partnerships, the 50 per cent CGT discount is replaced from 1 July 2027 by two mechanisms working together. Cost base indexation lifts your cost base by CPI over the holding period, so only the real gain above inflation is taxed. A 30 per cent minimum tax then applies to net capital gains, which stops a large gain being taxed at a low marginal rate.
For the wider picture, including who is affected and what the reform leaves untouched, see CGT changes in Australia.
This is a return, in broad shape, to the system that operated before 1999, with the minimum tax layered on top, explained further in CGT indexation explained. It is not a proposal or a Budget announcement. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 was enacted on 26 June 2026 following the 12 May 2026 Budget.
Key dates
Gains that accrued before 1 July 2027 keep the old treatment, including the 50 per cent discount where the asset was held more than twelve months. Only the portion accruing from that date forward falls under indexation and the 30 per cent floor. Section 102-6 sorts gains into categories so that each slice is taxed under the right set of rules.
Splitting a gain requires a line in the sand. The Act draws it by treating affected CGT assets as though they were disposed of just before 1 July 2027 and immediately reacquired at market value on that date, under the transitional rules in Subdivision 112-E.
Nothing is actually sold and no tax falls due on 1 July 2027. The deemed disposal is a measuring device. It fixes the gain that accrued under the old rules, defers it until you genuinely sell, and gives the new regime a starting cost base to index from.
That starting value has to come from somewhere. Either you establish it with a market valuation, or you elect the apportioning method and let a formula estimate it. For property, the difference between those two answers is frequently material, because property does not compound at one steady rate and the apportionment formula assumes it does.
Anyone holding an affected CGT asset across the date, and expecting to sell it at some point afterwards. In property terms:
Complying superannuation funds keep their one-third discount and are outside the individual changes. SMSFs holding property still have their own valuation obligations, including the Division 296 cost base reset election at 30 June 2026, covered on our SMSF property valuation page.
For advisers
This is a client-list exercise, not a one-offEvery client holding an affected asset across the date has a decision to make, and the decision is deferred until the sale year. Practices that pull the affected-client list early can stage valuations through 2027 rather than compressing them into the weeks before 30 June. See how we work with accountants.
Accountants can sort the client list with our 1 July 2027 valuation checklist for accountants.
You are not compelled to obtain a valuation. Subsections 112-155(3) and 112-165(3) let you elect an apportioning method instead, which applies one compounding growth rate across the whole ownership period rather than using actual values.
To see which method leaves you better off, the property CGT calculator for the new rules compares the tax both ways for every Australian market, by property type and by the year you bought.
| Market valuation | Apportioning method | |
|---|---|---|
| How the split is set | Actual market value at 1 July 2027 | One compounding growth rate from purchase price to sale price |
| Reflects when growth happened | Yes | No, it assumes one steady compounding rate and ignores improvements |
| Cost | A valuation fee | Nil |
| Evidence quality | Documented sales evidence for the date | Arithmetic, no property-specific evidence |
| Best suited to | Property with uneven growth, renovations, rezoning or a strong local run in a particular period | Property with steady, unremarkable growth across the whole holding period |
The choice is generally made when you eventually sell, not on 1 July 2027 itself. That sounds like a reason to wait, and for the decision it is. It is not a reason to skip the valuation, because the valuation is the only one of the two options that gets harder and more expensive the longer you leave it.
An independent, dated valuation prepared and signed by a Chartered Accountant and Certified Property Valuer, ready for whichever method you and your accountant choose at sale. Residential $297, commercial $595, AUD inc. GST. Order now and we prepare it in the first week of July 2027.
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Worked exampleAn investment property bought in 2005 for $320,000. The area gentrified through the 2010s and the property is worth $1,000,000 at 1 July 2027. It is sold in 2037 for $1,200,000. Total nominal gain: $880,000.
With a valuation: the gain splits at the actual value. $680,000 accrued before 1 July 2027 and falls under the old rules, where the 50 per cent discount applies. $200,000 accrued after, and indexation reduces that figure further before the 30 per cent floor is applied.
With the apportioning method: the formula compounds one growth rate across the whole ownership period, so most of the growth is deemed to arrive late and the value it assigns to 1 July 2027 sits below what the property was actually worth.
The difference: gain moves out of the discounted slice into the new regime, purely because the formula assumes steady growth when growth was not steady. The charts below show the split. The second worked example prices the tax.
The same property, two values at the reset
The formula puts the 1 July 2027 value $206,151 below the valuation.
With a valuationWith the apportionment formula
Where the $880,000 gain lands
Gain before indexation, split at each 1 July 2027 value.
Before the reset, 50% discountAfter the reset, indexation and 30% minimum
With a valuation
$680,000 before$200,000 after
With the formula
$473,849 before$406,151 after
Reverse the growth pattern and the answer reverses with it. A property that sat flat for years and then ran hard after 2027 can do better under the apportionment formula. That is precisely why the decision has to be made asset by asset, with a real number in front of you.
Treasury released the exposure draft of the apportioning method on 3 August 2026 and consultation closed on 21 August 2026, so it can still change before it is registered. The tax figures in the second worked example below are calculated on the exposure draft method and will be updated if the registered method differs. The comparison in formula versus valuation goes further into the trade-off.
The reform is law, but several pieces of administration are not finished. As at the date on this page:
We update this page as each piece lands. What none of it changes is the underlying position: if you hold property across 1 July 2027, that date's market value is either evidence you have or evidence you will have to reconstruct later.
New residential dwellings can elect to remain under the old regime, and separate changes limit negative gearing on established residential property acquired after 7:30pm on 12 May 2026. Both are tax questions for your accountant rather than valuation questions, but they affect who is weighing what.
Not for this reform. Complying superannuation funds keep their one-third CGT discount and sit outside the changes affecting individuals, trusts and partnerships. An SMSF holding property does not need a 1 July 2027 value for the purpose of Subdivision 112-E.
SMSFs do have their own dated valuation obligations, and they are easy to confuse with this one:
The Division 296 reset is covered on our SMSF property valuation page. Annual compliance valuations for audit are prepared by our sister practice at SMSF Property Valuations.
Where an SMSF member also holds property personally, in a family trust or in a partnership, those assets are affected by this reform in the ordinary way. The fund is carved out; the member is not.
The valuation date is fixed at 1 July 2027. The question is when you commission it.
If you are weighing a sale before the date instead, the arithmetic is set out in should you sell before 30 June 2027. The short version is that the deemed disposal already preserves your pre-reform gain, so selling early to beat the deadline usually achieves less than owners expect.
| Report | Fee (AUD inc. GST) | Turnaround |
|---|---|---|
| Residential, valued at 1 July 2027 | $297 | 24 to 48 hours |
| Commercial, valued at 1 July 2027 | $595 | 24 to 48 hours |
Pre-order your 1 July 2027 residential valuation today for $297 inc. GST. We prepare it in the first week of July 2027.
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The apportionment formula does not split a gain by time. It divides the sale price by the original purchase price, turns that into a single daily growth rate, and compounds it over every day of ownership. Because it compounds, most of the growth is deemed to arrive late, so the value it assigns to the reset usually sits below what the property was worth on the day. This example uses the method in Treasury’s exposure draft of 3 August 2026, resident tax rates from 1 July 2027 with the 2% Medicare levy, and CPI of 2.5% a year. The deemed disposal happens at the end of 30 June 2027, the same instant as the start of 1 July 2027.
For how the reset date sits alongside the other dates the law fixes, contract, death and first income, see which date is the CGT valuation date.
The property. Bought 1 July 2005 for $320,000. Worth $1,000,000 at the reset. Sold 1 July 2037 for $1,200,000. The owner has $135,000 of other taxable income in the year of sale.
| With a valuation | With the formula | |
|---|---|---|
| Value at 1 July 2027 | $1,000,000 | $793,849 |
| Gain before the reset | $680,000 | $473,849 |
| Taxable after the 50% discount | $340,000 | $236,925 |
| Tax before the reset | $155,400 | $106,955 |
| Indexed cost base, x 1.2801 | $1,280,128 | $1,016,229 |
| Real gain after the reset | nil | $183,771 |
| Tax after the reset | nil | $86,372 |
| Total tax on capital gain | $155,400 | $193,327 |
The formula assigns $793,849 to the reset date, $206,151 below the real value. That shifts $206,151 of gain out of the discounted era and into the indexed one, and costs this owner $37,927 more tax. The formula is free. A valuation is the only way to establish the higher figure, and it has to be evidenced as at the date.
Total tax on the capital gain
Same property, same sale price. The formula costs this owner $37,927 more.
Tax on the gain before the resetTax on the gain after the reset
With a valuation
$155,400
With the formula
$106,955 + $86,372 = $193,327
The renovation trap
Improvements make the formula worse, not betterThe apportionment formula works the growth rate out of the first element of the cost base only, the purchase price. Money spent on improvements reduces the gain but is left out of the growth rate, so a property bought cheaply and renovated is treated as though it grew far faster than one bought already finished for the same total outlay. The higher the original purchase price relative to the sale price, the better the formula treats you.
The calculator prices the difference for every capital city and rest-of-state market, any purchase year from 2015, your taxable income and any improvements, on the exposure draft method, with every step of the working shown.
Open the CGT calculatorOrder a 1 July 2027 valuationYou need a market value at that date if you hold an affected CGT asset across it and will eventually sell. You are not compelled to obtain a valuation, because the apportioning method is available as an alternative, but a valuation is the only option that reflects what your property was actually worth. Fully exempt main residences are not affected.
Yes. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026 and applies from 1 July 2027. The apportioning formula was released as an exposure draft on 3 August 2026 and is not yet registered, but the core change is enacted rather than proposed.
Affected CGT assets are treated as disposed of just before 1 July 2027 and reacquired at their market value on that date. Nothing is actually sold and no tax is payable then. The reset fixes the gain accrued under the old rules, defers it to the eventual sale, and gives the new indexation regime a starting cost base.
Usually not for tax reasons alone. The deemed disposal already preserves the gain that accrued to 1 July 2027 under the old rules, including the 50 per cent discount, so selling early to capture the discount largely duplicates what the transition does anyway. Selling costs and forgone growth then work against you. Discuss the position with your accountant.
You elect the apportioning method and accept whatever split the formula produces, or you commission a retrospective valuation for 1 July 2027 at some later point. The second option remains available for years, but the evidence base weakens over time, so it is the more expensive version of the same exercise.
Under the Labor Government's 2026 Budget reform, property held by individuals, trusts and partnerships is treated as sold and reacquired at the end of 30 June 2027. The gain is split at that value, set by a market valuation or by Treasury's apportioning formula. The full rules are on our CGT changes in Australia page.
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