Updated 8 October 2026
Note
Latest update8 October 2026. The reform is law. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026 and starts on 1 July 2027. Treasury's apportioning method determination, the formula alternative to a valuation, closed consultation on 21 August 2026 and is still an exposure draft. The ATO has not yet published reset-specific guidance or calculation tools.
The Labor Government's 2026 Budget changes to capital gains tax and negative gearing are now law, and the capital gains tax changes in Australia start on 1 July 2027. From that date the 50 per cent CGT discount is replaced, for individuals, trusts and partnerships, by cost base indexation and a 30 per cent minimum tax on net capital gains. Assets held across that date are treated as sold and reacquired at market value, so the gain you have already built up is split off and taxed under the old rules.
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.
In broad shape this is a return to the system that operated before 1999, with the minimum tax layered on top.
The second change is the one that creates work. Affected assets are treated as disposed of and reacquired at market value on 1 July 2027. Your gain is split in two: everything up to that date is worked out under the old rules, and everything after it under the new ones.
The reform does not change what you paid for the property. It adds a second figure that matters as much: the market value at the end of 30 June 2027. That figure decides how much of your eventual gain keeps the 50 per cent discount and how much is taxed under the new rules. You can establish it two ways. Treasury's apportioning formula spreads your total gain across the holding period using compounding daily growth, which assumes the property grew at the same rate every day you owned it. An independent valuation at the reset date uses the actual market value instead. Where the market moved unevenly, the two numbers differ, sometimes by a lot. Our 1 July 2027 CGT calculator shows both on your own figures, the 1 July 2027 valuation page explains how the report works, and a retrospective property valuation can establish the value after the date has passed.
The CGT discount changes are the part most owners will feel. The table sets out what applies to an individual, trust or partnership on either side of the reset date.
| Item | Gains accrued to 30 June 2027 | Gains from 1 July 2027 |
|---|---|---|
| CGT discount | 50 per cent discount on assets held more than 12 months | No discount for individuals, trusts and partnerships |
| Inflation adjustment | None | Cost base indexed by CPI over the holding period |
| Minimum tax rate | None; the discounted gain is taxed at your marginal rate | 30 per cent minimum tax on net capital gains |
| How the gain is measured | Purchase cost base to the 1 July 2027 market value | 1 July 2027 market value to the eventual sale price |
| Evidence needed | Purchase records | Market value at 1 July 2027, by valuation or the apportioning formula |
The two slices are worked out separately and added together at sale. The pre-reset slice keeps the discount whenever you sell, so the reform does not reach back into gains already made.
Read the full explainer: CGT discount changes from 1 July 2027.
It is law. This is not a proposal or a Budget announcement waiting on an election.
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 was enacted on 26 June 2026, following the Budget of 12 May 2026. The changes take effect from 1 July 2027, which gives owners a defined window to get their position in order.
Warning
The date is fixed, the evidence is not
A market value as at 1 July 2027 has to be established on evidence available for that date. That evidence is easy to assemble close to the date and progressively harder afterwards. The law does not move; the quality of what you can prove does.
In effect, yes, for the growth you have already had. Gains that accrued before 1 July 2027 keep the old treatment, including the 50 per cent discount where the asset was held for more than twelve months.
This is the part that is widely misread. The deemed disposal on 1 July 2027 is not a tax event that brings forward a bill, and it does not strip the discount from gains you have already made. It locks that treatment in rather than removing it. Growth to 1 July 2027 is measured under the old rules, discount included. Only the portion accruing from that date forward falls under indexation and the minimum tax.
The catch is evidential rather than legal. Splitting the gain requires a market value at 1 July 2027. If you cannot establish one, you cannot demonstrate how much of your gain belongs to the discounted era, and the split falls back to a formula that assumes your property compounded at one steady rate across every year you owned it, worked from the purchase price alone.
Planning win
The discount on accrued growth is preserved
A property bought years ago that has already run hard keeps the 50 per cent discount on all of that growth, provided the 1 July 2027 value can be established. The valuation is what converts the entitlement into something you can lodge.
Anyone holding an affected CGT asset across 1 July 2027 and expecting to sell it at some point afterwards. In property terms, that mostly means two groups.
Investment property owners. Residential or commercial, held by individuals, trusts or partnerships, acquired before 1 July 2027.
Pre-1985 owners. Property acquired before 20 September 1985 has sat outside the CGT system entirely. The reset changes that position, which is covered in pre-1985 property and the 1 July 2027 CGT reset.
Accountants and tax agents carrying a book of property clients are working through the same exercise at scale, which is set out on the page for accountants and tax agents. Our 1 July 2027 valuation checklist for accountants sorts which clients to look at first.
Negative gearing has changed, but only for property bought after Budget night. From 1 July 2027, rental losses on established residential property acquired after 7:30pm AEST on 12 May 2026 can no longer be deducted against wages or other income. Those losses are quarantined against income from residential investment property, with any unused amount carried forward to later years.
Newly built dwellings sit outside the limit, and so does any established property acquired at or before 7:30pm AEST on 12 May 2026, which keeps full negative gearing. The measure is set out in Budget Paper No. 2 alongside the CGT reform, but it is a separate change with its own start rules.
The detail is in negative gearing changes explained and is negative gearing grandfathered.
Negative gearing is a tax question for your accountant rather than a valuation question. It matters here because it changes the arithmetic for anyone deciding whether to hold an established rental across 1 July 2027, which is the same decision the CGT reset forces.
Plenty of the commentary overstates the reach of the reform. The following are unaffected.
The main residence exemption. A home that is fully exempt stays fully exempt. Nothing about the reform brings it into tax.
Complying superannuation funds. They keep the one-third discount.
Gains that already accrued. Growth to 1 July 2027 is measured under the old rules, discount included.
The evidence standard. The ATO still expects an objective, documented market value, whether the date is 1 July 2027 or 1999.
Two related measures sit alongside the reform without being part of it. 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.
Because the gain is split at 1 July 2027, the size of your bill turns on what that date's value is taken to be. There are two ways to establish it.
The first is a market valuation as at 1 July 2027, which uses documented comparable sales evidence for that date. The second is an apportioning method that owners can elect under subsections 112-155(3) and 112-165(3), which fixes the 30 June 2027 value by compounding one daily growth rate from your purchase price to your sale price, rather than using the actual value.
The formula assumes one steady compounding growth rate across the years you owned the property, worked out from the purchase price alone. Real property does not behave that way, and because compounding loads growth into the later years, the deemed value usually lands below what the property was worth on the day. More of the gain then falls into the period where the discount no longer applies. Where growth was slow or negative before the reset, the formula can work in your favour. Treasury released the exposure draft of the method on 3 August 2026.
The property CGT calculator prices that difference for every Australian market and every year of purchase, and valuation vs the ATO formula works through the mechanism in full.
The reform is law, but several pieces of administration are not finished. As at the date on this page:
None of it changes 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.
Secure your 1 July 2027 market value. A dated valuation report prepared on documented comparable sales evidence, so the split between the old rules and the new ones is one you can lodge and defend. Residential $297, commercial $595, AUD inc. GST. Turnaround 24 to 48 hours.
Order a 1 July 2027 valuation See how the process worksNothing is due immediately, and there is no return to lodge because of the reset alone. The practical steps are short.
Work out whether you are affected. If every property you hold is a fully exempt main residence, you can stop here.
Estimate what the choice is worth. The calculator gives you a figure for your market and purchase year before you spend anything.
Book the valuation close to the date. Comparable sales evidence around mid-2027 is the whole case. It is straightforward to assemble then and harder every year afterwards.
Talk to your accountant about timing. Whether to sell before or after the change is a tax question rather than a valuation one, and it is covered in should you sell before 30 June 2027.
1 July 2027. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 was enacted on 26 June 2026 following the 12 May 2026 Budget, so the change is law rather than a proposal, with a defined start date.
For individuals, trusts and partnerships it is replaced from 1 July 2027 by CPI indexation of the cost base together with a 30 per cent minimum tax on net capital gains. Complying superannuation funds keep the one-third discount, and gains that accrued before the date keep the old treatment.
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. The deemed disposal on that date locks that treatment in rather than removing it. Claiming it requires a market value at 1 July 2027 to split the gain.
No. The main residence exemption is unaffected. A home that is fully exempt stays fully exempt. A property that is partly income-producing is a different question and depends on the period it was rented.
No. The deemed disposal splits the gain for measurement; it does not trigger a payment or a return. Tax is worked out when you actually sell, using the split established at the reset date.
You fall back on the apportioning method, which fixes the 1 July 2027 value by compounding one growth rate from your purchase price to your sale price rather than using the actual value. Because compounding loads growth into the later years, more of your gain is usually taxed without the discount. A value can still be established after the date with a retrospective valuation for 1 July 2027.
The 12 May 2026 Budget replaced the 50 per cent CGT discount for individuals, trusts and partnerships with cost base indexation and a 30 per cent minimum tax on net capital gains from 1 July 2027. Assets held across that date are treated as sold and reacquired at market value, so earlier gains keep the old treatment.
From 1 July 2027 the 50 per cent discount no longer applies to gains made by individuals, trusts and partnerships. In its place the cost base is indexed for inflation and a 30 per cent minimum rate applies to net capital gains. Gains accrued before 1 July 2027 keep the discount, and complying super funds keep their one-third discount.
Yes, for new purchases only. From 1 July 2027, losses on established residential property bought after 7:30pm AEST on 12 May 2026 are quarantined against residential rental income and carried forward, not deducted against wages. New builds, and property bought on or before Budget night, keep full negative gearing.
