Should You Sell Your Investments Before the Capital Gains Tax Changes on 1 July 2027?
Capital Gains Tax in Australia is about to change more than it has in decades. And the first question almost everyone asks is whether they need to do something before the deadline.
Here is the short version. From 1 July 2027, the 50% CGT discount is replaced for most individuals, trusts and partnerships by indexing the cost base for inflation, with a minimum 30% tax rate applying to affected gains. The change is prospective, so gains that accrued up to 30 June 2027 keep their existing treatment no matter when the asset is eventually sold. That single feature is what determines whether selling early helps: because the old rules still apply to the gain already built up, selling now generally produces the same outcome on that portion as selling in ten years. What a sale before 1 July 2027 does change is everything else - transaction costs, time out of the market, and a tax bill payable years earlier than it otherwise would have been.
So the more useful question is not "do I sell before the deadline". It is "does this change anything about my plan".
For some investors, no. For a few, quite a lot.
I discuss this further in the latest episode of the Financial Autonomy podcast. You can listen
What is changing with capital gains tax in Australia?
Two things, and they work together.
Under the current rules, an individual who has held an investment for more than 12 months generally gets a 50% discount on the capital gain before it is added to taxable income.
From 1 July 2027, that discount is replaced for most affected investments by cost base indexation. The cost base is increased to reflect inflation, and tax applies to the real gain - the growth above inflation.
The second change is a minimum tax rate of 30% on capital gains made under the new regime by Australian resident individuals, directly or through trusts and partnerships.
One thing to keep separate. A minimum tax on discretionary trusts is a different measure, starting 1 July 2028, and it is not law yet. Easy to conflate with this one if you hold assets in a family trust.
This is not a Budget announcement any more. The measures were legislated in the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which received Royal Assent on 26 June 2026 . The ATO confirms both measures apply from 1 July 2027, and that "the CGT reforms will only apply to gains that accrue after 1 July 2027" .
Worth knowing: a second tranche of draft legislation covering the finer mechanics was out for consultation until 21 August 2026, and a further tranche of technical refinements is expected. The headline rules are settled. Some of the detail is not.
How will capital gains tax be worked out under the new rules?
There are really two calculations, and which one applies depends on when the asset was acquired.
For an asset acquired after 1 July 2027, indexation runs from purchase. Say it cost $100,000, inflation lifts the indexed cost base to $120,000, and it sells for $150,000. The real capital gain is $30,000, and that is the amount that goes into the tax calculation, subject to the 30% minimum.
Under today's rules, that $50,000 gain would simply be halved, putting $25,000 into taxable income.
So the assessable amount in that example moves from $25,000 to $30,000. Not nothing. Also not the catastrophe that "the 50% discount is being scrapped" tends to suggest.
For an asset already owned before 1 July 2027, indexation does not run from the original purchase date. This catches a lot of people out. The transition rules treat the asset as sold just before 1 July 2027 at its market value and reacquired at that value, so indexation applies only to growth from that point forward. The gain up to 30 June 2027 is worked out under the old rules instead.
Either way, the outcome depends on the numbers involved: how long the asset was held, how much inflation ran over that period, how much of the growth was real, and what other income sits in the same year.
Figures are illustrative only. Any actual calculation should be confirmed with a registered tax agent.
Do the CGT changes apply to gains I have already made?
No, and this is the biggest source of confusion in the whole reform
The new rules are prospective. Gains that accrued up until 30 June 2027 keep their existing treatment. Only gains accruing from 1 July 2027 move into the indexation and minimum-tax regime
An example. An investment property bought years ago for $500,000, worth $800,000 at 1 July 2027, eventually sold for $900,000.
Broadly, the $300,000 of growth to July 2027 falls under the old rules, including the 50% discount. The $100,000 of growth after that date falls under the new indexation and minimum-tax rules
That distinction matters more than anything else in this article.
Decades of accumulated gain are not being dragged into the new system retrospectively. If you have seen the word "grandfathered" used about these changes, this is what it refers to.
Should I sell my investment property before July 2027?
This is the question I am being bombarded with for the Ask an Expert column I write each Sunday in The Age and The Sydney Morning Herald. It arrives more often than any other CGT question, usually with the deadline attached and some urgency behind it.
Here is what actually determines the answer.
Because the new rules only apply from 1 July 2027 forward, a sale now generally produces the same tax outcome on the gain already built up as a sale in ten years' time. The 50% discount on that portion does not expire on 30 June 2027. It travels with the asset.
What a sale does bring forward is the costs. Agent fees, legal costs, potentially stamp duty on whatever comes next, time out of the market, and a CGT bill paid years earlier, leaving less capital to reinvest.
There can be perfectly good reasons to sell an asset this financial year. A deteriorating outlook for the investment. A plan to boost super. A portfolio too concentrated in one asset. Those reasons stand on their own merits
The tax change on its own may not add to that list, for the reasons above. PwC's read is that "30 June 2027 is generally not a transaction deadline. It is a valuation and modelling trigger" (PwC).
Whether a sale makes sense in a particular situation is a question for personal advice, not a blog.
Related reading: Should I Sell My Investment Property in Retirement
Do the CGT changes apply to shares, or just property?
Both, and more.
The change to the 50% discount applies to affected assets held by individuals, trusts and partnerships. Shares, managed funds, investment property, commercial property, business assets and other capital assets can all be caught.
Some things sit outside it. The main residence exemption is unchanged. Complying superannuation funds, including SMSFs, continue under their own CGT regime, keeping the one-third discount that applies to assets they have held for more than 12 months (Perpetual).
The small business CGT concessions are retained, and access to one of them is actually being widened. The same Act lifts the turnover threshold for the small business 50% active asset reduction from $2 million to $10 million from 1 July 2027.
One more point that catches expats and recent arrivals. The indexation provisions are framed around Australian resident individuals, and trusts with Australian resident individual beneficiaries. Foreign and temporary residents are outside them.
There is also a carve-out worth knowing about if new property is on the radar. For eligible new residential dwellings, both the old and new arrangements remain available to choose from.
For listed shares, the practical burden here is light. Historical prices around 1 July 2027 will be easy to establish.
Property, private businesses and unlisted assets are a different story. Which brings us to valuations.
Do I need a valuation of my property before 30 June 2027?
Not necessarily. But for some assets it is worth thinking about now.
The legislation creates a dividing line at 1 July 2027. The value of the asset at that point separates the old-rules gain from the new-rules gain, and for many assets there are two ways to establish it: a market valuation as at that date, or a prescribed apportionment formula, with the ATO to provide calculation tools. The formula is not available for every asset class, and the instrument setting its final scope was still being worked through as at September 2026.
The formula assumes the asset grew at a constant compounding rate across the whole holding period, which may not reflect what a particular asset was really worth at that date (PwC).
Here is the part that is easy to miss. The incentive generally runs in one direction. A higher supportable value at 30 June 2027 puts more of the eventual gain under the old 50% discount rules, and a lower value puts more of it under the new rules.
Which is exactly why the evidence has to hold up. The ATO's long-standing position is that a market valuation must be "objective and supportable", which in practice means independent and prepared by a suitably qualified valuer.
The reforms do not require a valuation of every asset a person owns. But for a significant asset where reconstructing a mid-2027 value years later would be difficult, that is a conversation worth having with a registered tax agent before the date passes.
Good records may turn out to be worth a great deal.
Does the 30% minimum tax mean everyone pays 30% CGT?
No. It is a floor, not a new flat rate.
Where the ordinary income tax calculation already results in the affected gain being taxed at 30% or more, the rule adds nothing. Where other income already puts the gain in a bracket at or above 30%, it generally makes no difference at all.
Where it bites is a large capital gain realised in a low-income year. The gap between the ordinary result and 30% gets bridged, so the effective rate on the post-July-2027 portion of the gain lifts to 30%.
That can happen deliberately or by accident. A year off work. A business winding down. The first year of retirement.
There is a significant exception. The Act exempts recipients of a range of income support payments, including the Age Pension, from the minimum tax rate, based on receiving a qualifying payment at some point during the income year. Tax is still payable on the gain in the ordinary way. The 30% floor simply does not apply.
For some retirees, that exception does a lot of work.
Do you pay capital gains tax when you retire?
Yes, and how much has always depended heavily on timing. That is the part of this reform that gets the least attention and deserves the most.
One of the oldest pieces of planning in the book is to defer selling an appreciated investment until after retirement, when taxable income and the marginal rate may be much lower. The same gain can attract less tax.
From July 2027, the benefit of that approach may be reduced on the post-July-2027 portion of a gain, because the 30% minimum can lift the effective rate back up regardless of how low other income is that year.
The strategy does not stop working. The pre-July-2027 portion of the gain is untouched, and the Age Pension exemption changes the picture again for those who qualify. But an assumption that has quietly sat underneath a lot of retirement plans now needs checking rather than assuming.
For someone whose plan involves holding an asset until retirement specifically to realise the gain in a low-income year, this is one of the areas that may warrant a fresh look before July 2027.
Related reading: The Downsizer Strategy
What happens to assets bought before capital gains tax existed?
This is the sleeper issue in the reforms.
Assets acquired before 20 September 1985 have always been treated as pre-CGT assets, sitting outside the system entirely.
From 1 July 2027, that ends. The Act removes pre-CGT asset status from that date.
The value accumulated up to then remains protected. Growth after that date can become taxable, with the 1 July 2027 value establishing the new cost base.
There are not many people still holding assets acquired before 1985. Where they exist, the dollar values are often substantial, and the owner has usually spent forty years assuming the asset would never attract CGT at all.
Anyone in that position may be well served getting tax advice before July next year rather than after.
Does this make superannuation a better option?
Potentially, and it makes the question of where investments are held more interesting than it used to be.
The new indexation and minimum-tax arrangements are aimed principally at investments held personally and through relevant trusts and partnerships. Complying super funds, including SMSFs, continue under their separate CGT regime.
So the relative tax treatment of growth assets inside super versus outside it has shifted.
That is not an argument for selling everything and tipping it into super. Contribution caps, preservation rules, transfer balance caps and the shape of the broader retirement plan all still apply, and none of them care about the CGT reform.
But For someone approaching retirement with substantial investments both inside and outside super, ownership and asset location may now be a bigger planning question than it was. It is also not something to act on from a podcast or a blog.
What should investors be doing before 1 July 2027?
The reforms do not create a deadline that forces a sale before 30 June 2027, because the pre-transition gain retains its existing treatment whenever the asset is sold. The most useful way to think about 2026-27 is as a planning year, not a deadline year.
Areas that commonly warrant review between now and then:
Where the largest unrealised gains sit across assets held outside super.
Which assets were likely to be sold in the next few years anyway, for reasons that have nothing to do with tax.
Records and cost base evidence, particularly for property, private businesses and unlisted assets where a mid-2027 value would be hard to reconstruct later.
Anything acquired before 20 September 1985, which needs tax advice of its own.
Any plan built on realising a gain in a low-income retirement year, which may not deliver what it used to.
Where growth assets are held, inside super versus outside it.
How capital losses will be applied, since the Act sets an order in which they must be used against deferred pre-transition gains, which removes some discretion that exists today.
Whether a sale already under consideration is better completed before 30 June 2027, on its own merits rather than because of the date
For a lot of people the review may end with no action at all, and that is a legitimate result rather than a failure to plan.
Tax rules should inform an investment strategy. They should not dictate it.
Where this leaves you
The hard part of a tax change is rarely the rule itself. It is working out whether the rule changes what makes sense for you.
A decision to sell, hold, contribute more to super or restructure how investments are owned can affect far more than one tax bill. It can flow through to retirement timing, cash flow, investment mix and how much flexibility there is later.
If you would like to work through whether the 2027 CGT changes affect your strategy, that is exactly the kind of decision our advisers can help with. We can look at the pieces together and help you understand your options before you make a move that is hard to undo.
Frequently Asked Questions
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Broadly, yes, for gains already accrued. The changes are prospective. Gains that accrued up to 30 June 2027 retain their existing treatment, including the 50% discount where it applied, regardless of when the asset is eventually sold. Only gains accruing from 1 July 2027 fall under the indexation and minimum-tax rules. This is different from the negative gearing changes, which use a separate cut-off of 7:30pm AEST on 12 May 2026 for properties already held.
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Yes. The measures were enacted in the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which received Royal Assent on 26 June 2026, and they take effect from 1 July 2027. A second tranche of draft legislation dealing with more detailed mechanics, including the apportionment method, was out for consultation until 21 August 2026, and a further tranche is expected. So the headline rules are law, while some technical detail remains subject to change as at September 2026.
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Generally no. The Act exempts recipients of a range of income support payments, including the Age Pension, from the 30% minimum rate, based on receiving a qualifying payment at some point during the income year. Capital gains tax is still payable on the gain under the ordinary rules. Whether a particular payment qualifies should be confirmed with a registered tax agent.
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Generally yes. The replacement of the 50% discount with indexation applies to affected capital assets held by Australian resident individuals, trusts and partnerships, which can include commercial property as well as residential investment property, shares and business assets. The main residence exemption is unchanged, the small business CGT concessions are retained, and complying super funds continue under their own regime.
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Generally no, while it remains the owner's main residence and earns no income. The main residence exemption is unchanged by these reforms. The position can be different where a home has been rented out for a period, or is later transferred or inherited, because part of the gain can come into the CGT system. Those situations turn on the specific facts and are worth checking with a registered tax agent
This article is for educational purposes only and does not take into account your individual circumstances. If you would like tailored advice, we can help you work through the numbers properly.
