The 50% CGT Discount Is Going: What Replaces It From 1 July 2027

You have held an investment property for a few years. You always assumed that when you sell, half the gain would be sheltered from tax. That assumption is no longer safe for gains that accrue after 1 July 2027.

This is not a proposal. The 50% CGT discount has been abolished for CGT events from 1 July 2027. The change was announced in the 2026-27 Federal Budget, passed both houses of Parliament on 25 June 2026, and received royal assent on 26 June 2026.

What the New Rules Actually Say

From 1 July 2027, the 50% CGT discount will be replaced with cost base indexation and a 30% minimum tax on net capital gains for assets held more than 12 months.

Those two moving parts work together:

1. Cost base indexation: Taxpayers will only be taxed on "real" capital gains, with their asset's cost base uplifted by CPI inflation from acquisition to the date of sale.
2. 30% minimum tax: A new additional amount of income tax may be imposed where required to ensure a minimum effective tax rate of 30% on certain capital gains made by Australian resident individuals on or after 1 July 2027. The minimum tax is calculated on the taxpayer's post-1 July 2027 portion of a capital gain, and applies only to the extent the gain is not already taxed at 30% or more under the marginal rates applicable to them.

The changes apply to all CGT assets held by individuals, trusts and partnerships, including pre-1985 CGT assets. That means investment property, shares, ETFs, and managed funds outside superannuation are all affected.

One important carve-out for new builds: Investors in new residential property may choose between the existing CGT discount or the new regime on disposal. Per the 2026-27 Budget papers (budget.gov.au), this carve-out is intended to maintain incentives for new housing supply.

The Transitional Rules: Your Existing Property

The legislation protects gains you have already accrued. For assets held on 1 July 2027 and sold after that date, the gain is split into two components: the gain accrued before 1 July 2027 (subject to the existing 50% discount); and the gain accrued from 1 July 2027 onwards (subject to indexation and the 30% minimum tax).

In plain terms: if you bought a property in 2020 and sell it in 2030, you are not losing the 50% discount on everything. The pre-July 2027 gain is still sheltered. Only new growth after that date falls under the new regime.

The changes will not affect the main residence exemption, and income support payment recipients will be exempt from the minimum tax.

What This Means in Practice: A Worked Scenario

Consider two investors, both in the 47% marginal tax bracket, each selling a property two years after 1 July 2027.

Investor A bought an established property before Budget night (12 May 2026). The gain that accrued to 1 July 2027 retains the 50% discount. On the post-July 2027 portion, say $60,000 of nominal gain, CPI indexation of around 2.5% per year reduces the taxable amount to roughly $34,688. Assuming a 47% tax rate, the tax on the gain since 1 July 2027 is $16,303, instead of $14,100 with a 50% discount. That is a real but not catastrophic difference.

Investor B bought an established property after Budget night with a higher cost base. The same indexation mechanics apply, but they lose access to the old negative gearing treatment on the post-Budget established property. The combined effect is worth modelling carefully with a tax adviser before any purchase decision.

These figures are illustrative only, drawn from the Australian Government's own Budget fact sheet. They are not projections of your property's performance or tax outcome.

SMSFs Are a Different Story

This is the part that surprises most people. The final legislation confirms that complying superannuation funds are excluded from the new regime. SMSF trustees and APRA-fund members retain the existing one-third (33.3%) CGT discount and the pension-phase exemption. The effective 10% CGT rate on long-held accumulation-phase assets, and 0% in pension phase, both survive the reform.

To be specific about how super CGT works:

• Accumulation phase: Inside super, investors receive a 33% discount on capital gains on long-held assets, which will remain. Earnings in super are taxed at a flat 15% rather than an individual's marginal tax rate. The 33% discount gives an effective tax rate of 10%.
• Pension phase: Inside an SMSF in accumulation phase, earnings continue to be taxed at 15%, and capital gains on assets held for more than 12 months at 10%. In pension phase, earnings and capital gains remain entirely exempt from tax.

While the tax treatment of investment property held in personal names, family trusts and partnerships is about to become significantly less favourable, the tax treatment of assets held inside superannuation, including SMSFs, remains unchanged.

This does not mean SMSF property is straightforward. The rules around what an SMSF can hold and how it can borrow changed significantly on 10 August 2026, and those structural questions matter as much as the tax treatment. An SMSF specialist accountant can map out what is currently available for your fund's situation.

What to Think About Next

If you hold an investment property personally or through a trust, there are three things worth working through before June 2027:

1. Understand your split. Work with a tax adviser to estimate how your existing property's gain is likely to divide across the pre- and post-July 2027 periods. The transitional rules are genuinely protective, but you need the numbers in front of you.
2. Consider the structure question for new purchases. An established investment property bought after Budget night (12 May 2026) faces both the new CGT regime and restricted negative gearing. A new build gives you a choice of CGT method on disposal. An SMSF structure sits outside these changes entirely, though it comes with its own rules and costs. These are conversations for a financial adviser and SMSF specialist accountant, not choices to make on a hunch.
3. Talk to a broker about finance. The structure of ownership affects how you can borrow, at what cost, and what security is required. A licensed mortgage broker or SMSF lending specialist can walk through what finance options look like for personal, trust, or super-fund ownership.

If you want to understand how EWC sources investment and SMSF properties and coordinates the finance side, visit our services page or book a call to talk through your situation.

General information only, not personal financial advice. Speak with a licensed adviser before acting.