Capital Gains Tax on Property in Australia: The Complete 2026-27 Guide

If you’re selling a property this financial year, capital gains tax is probably the biggest single cost you’ll face — bigger than agent commissions, bigger than stamp duty was when you bought. And yet most sellers only think about it after they’ve signed the contract, when most of the planning opportunities have already evaporated.

Here’s the thing most people get wrong from the start: CGT isn’t a separate tax with its own rate. There’s no “CGT rate” in Australia. Your capital gain gets added to your taxable income for the year and taxed at your marginal rate, just like your salary. That one misunderstanding is behind half the nasty surprises at tax time.

This guide walks through exactly how capital gains tax on property works in Australia for 2026-27 — the calculation, the 50% discount, the main residence exemption, the 6-year rule — with real numbers at every step.

Quick answer: You pay CGT on an Australian property when you sell (or otherwise dispose of) it for more than your cost base. Your cost base is the purchase price plus buying costs, selling costs and capital improvements. If you owned it for more than 12 months as an individual, you generally halve the gain with the 50% CGT discount, then add the remainder to your taxable income. Your own home is usually fully exempt. The tax is triggered on the contract date, not settlement.

How CGT on property actually works

A “CGT event” — the thing that triggers the tax — usually happens on the day you sign the contract of sale, not the day settlement occurs. This trips people up every June. Sign a contract on 28 June 2027 and the gain belongs to 2026-27, even if settlement happens in September. If you were planning to push the gain into next year, that plan just failed.

The basic formula is straightforward:

Capital gain = Sale price − Cost base

Your cost base isn’t just what you paid for the property. It includes:

Cost base element	Examples
Purchase price	Contract price
Buying costs	Stamp duty, legal fees, buyer’s agent fees, building/pest inspections
Ownership costs (if not claimed as deductions)	Interest, rates, insurance — but only if you haven’t already claimed them
Capital improvements	Renovations, extensions, new kitchen — not repairs
Selling costs	Agent commission, legal fees, advertising, staging

[SCREENSHOT NEEDED: CGT calculator — property example, $850,000 sale price with cost base breakdown]

What surprises a lot of sellers: you can’t add repair and maintenance costs to the cost base if you already claimed them as tax deductions while renting the property out. It’s one or the other. But a genuine improvement — a new deck, a renovated bathroom — goes straight onto the cost base and shrinks your gain dollar for dollar. Keep every receipt. The ATO expects you to substantiate each element, and “poor records” is one of the most common reasons property investors overpay.

The 50% discount and the 12-month rule

Here’s the concession that does the heaviest lifting for Australian property investors. If you’re an individual (or investing through a trust) and you’ve owned the asset for more than 12 months, you get to halve your capital gain before it touches your tax return.

The 12 months are measured from contract to contract, and you exclude both the purchase date and the sale date from the count. Sell on day 364 and you get nothing; sell on day 366 and you halve your taxable gain. When a sale is close to the line, check the exact contract dates before you sign anything — a few days’ impatience can cost tens of thousands.

Who gets what:

Owner type	Discount
Individual (Australian resident)	50%
Trust	50%
Complying super fund	33.33%
Company	None — companies pay full CGT at the company tax rate
Foreign/temporary resident	Generally no discount on gains accrued after 8 May 2012

One more wrinkle worth knowing: investors who provide affordable rental housing to eligible tenants may qualify for an additional discount of up to 10%, taking the total discount to 60%. It’s a narrow category with strict eligibility rules, so don’t assume it applies — but if you rent below market to eligible tenants, it’s worth asking your accountant about.

The main residence exemption: when you pay nothing

Your own home is usually completely exempt from CGT. But “usually” is doing a lot of work in that sentence. All three of these conditions have to hold for the whole time you owned it:

1. It was your main residence for the entire ownership period
2. You never used it to produce income (no renting it out, no home business claiming part of it)
3. The land is 2 hectares or less

Miss any one of them and you’re into partial-exemption territory. The classic traps: renting out a spare room on Airbnb for a year, running a business from a home office and claiming occupancy expenses, or buying a house on a big rural block. None of these automatically destroy the exemption, but they shrink it — and the calculation gets fiddly fast.

Properties bought before 20 September 1985 are generally exempt from CGT entirely, regardless of all this. If you’re dealing with a very old family property, check the acquisition date before you do anything else.

The 6-year rule: move out, keep the exemption

This is the rule that saves more sellers than any other, and the one most people have only half-heard. If you move out of your main residence, you can continue treating it as your main residence for CGT purposes for up to six years — even while it’s rented out and earning you income.

The conditions that matter:

• It was genuinely your main residence before you moved out
• You don’t treat any other property as your main residence during the same period (one main residence at a time)
• You sell within the six years — or move back in, which resets the clock

A real scenario. Daniel bought an apartment in Brisbane for $520,000 in 2019 and lived in it for two years. In 2021 work took him to Melbourne, so he rented the Brisbane apartment out. In 2025 — four years later — he sold it for $780,000. Because he never nominated another main residence and sold within six years of moving out, the entire $260,000 gain was exempt. Zero CGT.

Where people come unstuck: buying another home and living in it while the old one is rented. You can’t have two main residences. The moment you nominate the new place, the 6-year clock on the old one stops being available for the overlapping period.

Partial exemptions: when it’s not all-or-nothing

Life is rarely clean enough for a full exemption. Maybe you rented the place out for three years before moving in, or you ran a business from one room. The ATO’s formula for the taxable slice is:

Taxable gain = Total capital gain × (days not your main residence ÷ total days owned)

Days are counted on contract dates, not settlement dates. Then, if you held the property for more than 12 months, the 50% discount applies to the taxable portion.

Worked example. Priya bought a unit for $600,000 in July 2016 and rented it out immediately. In July 2019 she moved in and lived there until selling for $850,000 in July 2026.

• Total gain: $850,000 − $600,000 = $250,000 (ignoring costs for simplicity)
• Days owned: ~3,650. Days rented out: ~1,095
• Taxable portion: $250,000 × (1,095 ÷ 3,650) = $75,000
• 50% discount (held > 12 months): $75,000 × 50% = $37,500 added to her taxable income

[SCREENSHOT NEEDED: CGT calculator — partial exemption example, $850k sale with 3 of 10 years rented]

Full worked example: investment property sale

Let’s put it all together with realistic numbers. Michael bought an investment property in March 2019 and sells in September 2026 — comfortably over 12 months.

Item	Amount
Sale price	$850,000
Purchase price	$620,000
Buying costs (stamp duty, legals)	$25,000
Capital improvements (new kitchen, 2022)	$25,000
Selling costs (agent, legals)	$19,000
Cost base	$689,000
Gross capital gain	$161,000
50% CGT discount	−$80,500
Net capital gain added to income	$80,500

If Michael’s marginal tax rate is 37% (2026-27 bracket for $135,001–$190,000), the CGT bill is roughly $80,500 × 37% = $29,785, plus the 2% Medicare levy on the gain (~$1,610), for a total of about $31,395.

Notice what mattered most: the $69,000 of costs added to the cost base saved him roughly $12,700 in tax at that rate. Every receipt you kept is money.

Try your own numbers in our free CGT calculator — it handles the discount, cost base and marginal rates for 2026-27 automatically. And if you’re buying rather than selling, our stamp duty calculator will tell you what the purchase will cost you upfront.

Mistakes that cost sellers thousands

Forgetting the contract-date rule. Planning a July sale for next year’s tax return, then signing in June. The ATO taxes the year you sign.

Selling just short of 12 months. The discount is binary. Eleven months and three weeks gets you exactly the same as eleven days: nothing.

Not keeping improvement receipts. That $40,000 renovation with no paperwork is $40,000 of cost base you can’t prove — worth up to $18,000 in extra tax at the top marginal rate.

Assuming the main residence exemption is automatic. Rent it out, run a business from it, or hold more than 2 hectares, and you need to do the partial-exemption maths.

Gifting property to family. The ATO treats most gifts and transfers as happening at market value, even if no money changes hands. You can trigger CGT without receiving a cent.

Frequently asked questions

Do I pay CGT if I sell my own home?
Usually no — if it was your main residence the whole time, wasn’t used to earn income, and sits on 2 hectares or less, the gain is fully exempt. If any of those fail, a partial exemption may apply.

How long do I need to own a property to get the 50% CGT discount?
More than 12 months, measured from the contract purchase date to the contract sale date (excluding both dates). Individuals and trusts qualify; companies don’t.

Is CGT calculated on settlement date or contract date?
Contract date. Sign in June, and the gain counts in that financial year even if you settle in September.

Can I still claim the main residence exemption if I rented my home out?
Yes, for up to six years after moving out under the 6-year rule — provided you don’t claim another main residence in the same period.

Do I pay CGT on an inherited property?
It depends. Inherited dwellings can be fully exempt if sold within two years of the deceased’s death in the right circumstances. Renting it out or waiting longer can trigger CGT — get advice before you decide.

What records do I need to keep?
Everything: purchase contract, stamp duty and legal invoices, loan statements, improvement receipts, rental statements, depreciation schedules, and the sale contract. Keep them for at least five years after the sale.

The bottom line

Capital gains tax on property rewards the organised and punishes the hurried. Know your cost base, watch your dates, and run the numbers before you sign anything — not after. For 2026-27, the 50% discount and the main residence exemption remain the two concessions that matter most, and the difference between using them well and missing them is often tens of thousands of dollars.

Run your sale through our free CGT calculator to see your own liability in under a minute, or browse all our tax tools if you’re juggling a sale alongside income tax or stamp duty planning.