Updated 10 October 2026
From 1 July 2027 the 50 per cent CGT discount applies only to the part of your gain that accrued before that date. Growth after it is indexed for inflation instead and taxed at no less than 30 per cent. The split is set by the property's market value at the end of 30 June 2027.
At a glance
- The 50 per cent discount is kept for gains accrued up to the end of 30 June 2027.
- Gains accrued after that date are indexed for inflation and taxed at a minimum rate of 30 per cent.
- The split uses the value at the end of 30 June 2027, set by an independent market valuation or by Treasury's apportioning formula.
- The change is law: Treasury Laws Amendment (Tax Reform No. 1) Act 2026, Royal Assent 26 June 2026.
- Nothing is payable on 1 July 2027. The split is applied when the property is sold.
In this guide
What changes to the CGT discount on 1 July 2027
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 replaces the 50 per cent CGT discount for individuals, trusts and partnerships with two mechanisms from 1 July 2027. The cost base is indexed for inflation, so only the real gain is taxed, and a 30 per cent minimum tax applies to capital gains.
The discount is not taken away from growth you have already had. Every affected asset held at the end of 30 June 2027 is treated as sold and bought back at that moment, which is the same instant as the start of 1 July 2027. Your gain is cut into two slices at that value:
- Before the reset. The gain from purchase to the end of 30 June 2027 keeps the existing rules, including the 50 per cent discount where the asset was held for at least 12 months.
- After the reset. The gain from 1 July 2027 to the day you sell gets indexation and the 30 per cent minimum, with no discount.
The 30 per cent minimum tax itself applies to Australian resident individuals; trusts move to indexation. Companies never had the discount, so nothing changes for them on this point. Complying superannuation funds keep their one-third discount. The ATO's overview of the reform confirms the measures are law and that they apply only to gains accruing from 1 July 2027.
Who keeps the 50 per cent discount
Everyone who qualifies today keeps it on the part of the gain that accrued before the reset, whenever they sell.
A property bought in 2015 and sold in 2032 has two slices: 2015 to 30 June 2027, where the discount applies, and 1 July 2027 to 2032, where indexation and the minimum rate apply. A property bought after 1 July 2027 has no pre-reset slice at all.
Two points are often confused with this:
- Negative gearing has a different cut-off. The negative gearing limit turns on whether an established residential property was bought after 7:30pm AEST on 12 May 2026. The discount split turns on the value at 1 July 2027. One property can be caught by one test and not the other. The two tests are compared in is negative gearing grandfathered.
- New residential dwellings. Owners of qualifying new builds can choose to stay with the discount. The definition of a new residential dwelling was still at exposure draft when this post was published.
The wider reform, including what it leaves untouched, is set out on our CGT changes in Australia page.
How the gain is split at 1 July 2027
The value at the end of 30 June 2027 can be established in two ways.
An independent market valuation. A valuer establishes what the property was actually worth at the reset date from documented comparable sales evidence.
Treasury's apportioning formula. The formula divides your sale price by your purchase price, converts that into one compounding daily growth rate over the whole holding period, and applies it to the days up to and including 30 June 2027. It looks only at the purchase price, so improvements are ignored, and it assumes the property grew at the same rate every day you owned it. Treasury released the formula as an exposure draft on 3 August 2026. Consultation closed on 21 August 2026 and the instrument is not yet registered.
Note
Worked exampleA house is bought for $600,000 on 1 July 2017 and sold for $1,000,000 on 30 June 2030. The total gain is $400,000. The formula compounds the growth over 4,748 days of ownership and applies it to the 3,652 days up to the reset, giving a deemed value of about $888,800 at the end of 30 June 2027. That puts about $288,800 of the gain before the reset, where the discount applies, and about $111,200 after it. If an independent valuation shows the property was worth $950,000 at the reset date, $350,000 of the gain sits before the reset and $50,000 after it. Acquisition and selling costs are left out to keep the arithmetic clear.
Where a market moved unevenly, the two figures differ, sometimes by a lot. Our 1 July 2027 CGT calculator shows both slices on your own numbers, and the 1 July 2027 valuation page explains how the report works. The mechanics of the formula are covered in valuation vs the apportionment formula.
Indexation and the 30 per cent minimum rate in practice
Indexation. For the post-reset slice, the cost base starts at the 1 July 2027 value and is lifted by the movement in the Consumer Price Index between the quarter in which 1 July 2027 falls and the quarter in which you sell. Treasury's draft examples index every element of the cost base except ownership costs such as interest and rates. Only the gain above inflation is taxed. How the old and new indexation systems compare is covered in CGT indexation explained.
The 30 per cent minimum. The indexed gain is taxed at your marginal rate or 30 per cent, whichever is higher. A person whose other income would put the gain in a lower bracket pays 30 per cent on it. A person already on 37 or 45 per cent pays their marginal rate. The resident brackets from 1 July 2027 are nil to $18,200, 14 per cent to $45,000, 30 per cent to $135,000, 37 per cent to $190,000 and 45 per cent above that, plus the 2 per cent Medicare levy.
The result is that the post-reset slice is taxed more lightly than today when inflation has done most of the work, and more heavily when real growth is strong or the seller's income is low. The pre-reset slice is unaffected either way.
Warning
Evidence the ATO will expectWhichever route you use, keep the purchase contract and the sale contract. If you use a valuation, keep the report itself. A market value used in a tax return has to be supportable: prepared by a qualified valuer, from documented comparable sales evidence, with the method shown.
The ATO sets out what it looks for in its guidance on market valuation for tax purposes.
Fix the figure the discount split turns on
A 1 July 2027 valuation sets the value that decides how much of your gain keeps the discount. Residential $297, commercial $595, AUD inc. GST, 24 to 48 hours.
Start your orderHow it worksWhat to do before and after the date
Before 1 July 2027. Nothing is payable and nothing has to be lodged because of the reset. The useful step is to work out whether a valuation at the reset date is likely to help. It usually does where the market grew unevenly, where the property was renovated, or where it was bought below market value.
After 1 July 2027. The value can still be established later. A retrospective valuation for 1 July 2027 is prepared from sales evidence around the reset date, and the evidence is easiest to assemble close to it.
At sale. The choice between the valuation figure and the formula figure is made when the gain is reported, so both can be run and compared at that point.
For advisers
For accountantsFor clients with large pre-reset gains, run the formula figure and the valuation figure side by side and keep both on file. The valuation only needs to be ordered once, and it serves the client whichever method is chosen at sale.
Practices working through a client list can see how we handle volume on the page for accountants and tax agents.
Common questions
Does the CGT discount end on 1 July 2027?
No. The discount continues for the part of a gain that accrued before the end of 30 June 2027, whenever the asset is sold. Only growth after that date loses the discount. That later growth is indexed for inflation and taxed at a minimum rate of 30 per cent instead.
Do I pay any tax on 1 July 2027?
No. The reset sets a value for a later calculation and does not trigger a payment or a return. Tax is worked out in the year the property is actually sold, with the gain split at the reset value into a discounted slice and an indexed slice.
Is the CGT discount change law?
Yes. 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 formula, the alternative to a valuation, was still an exposure draft when this post was published, so its detail can change.
Can I choose between the formula and a valuation?
Yes. The Act sets the reset value at market value and allows an owner to choose an apportioning method instead, with the choice made when the asset is sold. As drafted, the formula is available for real property and for assets without a readily ascertainable market value.
What if I bought the property after 1 July 2027?
There is no pre-reset slice, so the 50 per cent discount does not apply to any of the gain. The whole gain is indexed for inflation from purchase and taxed at a minimum of 30 per cent when the property is sold.
Sources
- Treasury Laws Amendment (Tax Reform No. 1) Act 2026, Federal Register of Legislation
- ATO, Tax reform: reforming negative gearing and capital gains tax
- Budget 2026-27, Budget Paper No. 2
- Treasury, Capital gains tax and negative gearing consultation, including the CGT apportioning method exposure draft
- ATO, CGT discount
