Should You Sell Your Investment Property Before 1 July 2027?

From 1 July 2027 the 50% capital gains tax discount is replaced. That sentence has sent a lot of investors to their agent with one question: sell before the date, or lose the discount? The answer in the Act is neither. Gains you have made up to 30 June 2027 keep the discount whenever you sell. Only growth after that day is taxed under the new rules. This guide sets out exactly how the split works, then runs one ordinary rental through the property sale profit calculator at three sale dates so you can see what the date is worth in dollars — which, for this property, is less than two years of holding it.

What Changes on 1 July 2027 — and What Doesn't

The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Act No. 49 of 2026) received Royal Assent on 26 June 2026. It is law, not a proposal. For individuals, partnerships and trusts, it replaces the 50% CGT discount with two things that work together on gains accruing from 1 July 2027: the cost base is indexed for inflation, so only the real gain is taxed; and a 30% minimum tax rate applies to that real gain. Superannuation funds (including SMSFs) and widely held trusts are outside the change. Investors in eligible new residential dwellings can choose either regime on the whole gain.

One thing the Act does not do: it does not grandfather the discount by purchase date. A property bought in 2015 and a property bought in 2026 get the same treatment — discount on the gain to 30 June 2027, new rules after. The 12 May 2026 date matters for negative gearing, covered below, not for the discount.

The Date That Counts Is the Contract Date

For property, the CGT event happens when the contract of sale is signed. A contract exchanged on 28 June 2027 that settles in August is a pre-1 July 2027 sale and gets the full discount on the whole gain. A contract signed on 2 July 2027 is a post-changeover sale, however long the campaign ran beforehand. If timing matters to you, it is the exchange date you are managing, and auction campaigns, cooling-off periods and finance conditions all sit inside it.

How the Split Works

The mechanism is a deemed sale. Under new Subdivision 112-E, an asset you hold on 30 June 2027 is treated as sold just before 1 July 2027 and bought back just after, at its market value that day. Nothing is payable then — the pre-2027 gain waits until you actually sell, and keeps its 50% discount when it does. The market value becomes the cost base for everything that follows, and from 1 July 2027 that cost base is indexed for CPI. A valuation as at 30 June 2027 is the pathway in the Act (section 112-155); section 112-185 allows the Minister to make an alternative apportionment formula by legislative instrument, and as at July 2026 none had been made. Keep evidence of your property's value around that date whether or not you intend to sell.

Treasury's own example shows the shape of it. An asset bought on 1 July 2022 for $800,000, worth $1,131,371 on 1 July 2027 and sold on 1 July 2032 for $1,600,000, produces a taxable gain of about $485,643 under the new rules against $400,000 under the old discount — around $40,000 more tax at the top rate. That is a property growing at roughly 7% a year for ten years, held through five years of the new regime. Slower growth, or a shorter post-2027 holding, narrows the gap quickly, as the next section shows.

One Rental, Three Sale Dates

The property: an established house in metropolitan NSW bought in 2020 for $800,000 with a 20% deposit and a $640,000 principal-and-interest loan averaging 6% since. It rents for $650 a week with a 7.5% property manager, and the owner sits in the 39% bracket (37% plus Medicare). Agent commission is 2%; everything else uses the calculator's published defaults. We assume the property is worth $1,050,000 on 30 June 2027. Every cash figure below is the calculator's own output; the tax split is computed from the Act's method and reconciles to Treasury's example.

Scenario A — contract signed June 2027, before the changeover

Scenario B — held and sold mid-2029, two years into the new rules

Two more years of ownership adds $67,456 of interest and $17,070 of running costs, and brings in $67,600 of rent and $6,601 of refunds — a net carrying cost of about $10,300 before any growth. The question is what the growth and the new tax rules do to the rest. Three growth rates, all run through the same calculator:

How the split-rules column is built, using the 4% row: the gain to 30 June 2027 is $1,050,000 less the $832,712 cost base, or $217,288 — discounted to $108,644 and taxed at 39%, which is $42,371. The $1,050,000 then becomes the new cost base and is indexed at 2.5% a year for two years to $1,103,156. Net proceeds in 2029 are $1,135,680 less $30,425 of selling costs, or $1,105,255 — a real gain of just $2,099, taxed at 39% for $819. At 2% growth the indexed cost base exceeds the net proceeds, so the post-2027 portion produces no taxable real gain at all (whether that real loss can reduce the earlier portion is a question for your agent). At 6% the real gain is $45,097 and the tax on it $17,588.

Two things stand out. First, in every row the new rules produced less CGT than the old 50% discount would have on the whole gain — because indexing the 2027 value for inflation removes most of the later gain, and selling costs are deducted in full against the undiscounted portion rather than at half weight. Second, the tax difference is small next to the equity difference: two more years of holding added between $25,000 and $93,000 to the walk-away figure across these growth rates, after the extra interest and the new tax. For this property, the deadline is worth less than the time.

The crossover where the new rules start to cost more than the discount is growth of about double the inflation rate on the post-2027 portion — around 5% a year at 2.5% CPI — for anyone on the 32% bracket or above. Selling costs push the practical break-even a little higher. A property you expect to grow at 7–8% a year for several more years is the case where the pre-2027 sale can come out ahead on tax; even then, that gain has to clear the cost of selling early, which is the next section.

The Costs of Selling Earlier Than You Planned

A tax-driven sale carries every normal cost of selling, and two that are specific to selling on someone else's timetable. The normal costs are commission, marketing, conveyancing and loan discharge — about 3–5% of the price, priced state by state in our guide to the cost of selling a house. The specific ones:

• Re-entry stamp duty. If you sell one rental to buy another, the new purchase attracts full transfer duty — $30,412 on this example's $800,000 purchase in NSW, more on a dearer replacement. Check your state in the stamp duty calculator. That is real money spent to reposition the same capital.
• Losing negative gearing on the replacement. A rental you already held at 7:30pm AEST on 12 May 2026 keeps full negative gearing against your salary until you sell it. An established property bought after that moment has its rental losses ring-fenced from 1 July 2027 — usable only against other residential rent or a future residential capital gain. Sell the grandfathered property and buy another established one, and you have traded that protection away; the 12 May 2026 contract rule explains the mechanics. New residential dwellings are exempt and keep full negative gearing.
• Selling into a soft patch. A forced timetable means you take the price the market offers that month. The difference between a good and an average campaign result is routinely larger than the tax you are trying to save.

Who Should Still Run the Numbers Seriously

The worked example is one property at one bracket. The decision tilts toward a pre-2027 sale when several of these line up:

• You were going to sell within a year or two anyway. Then the question is only whether the contract lands in June 2027 or September 2027, and the tax difference on a few months of growth is usually small either way — but it is free to get the date right.
• You expect strong growth after 2027. Above roughly double CPI a year on the post-2027 portion, the new rules cost more than the discount. Be honest about where that expectation comes from.
• You are on the 47% bracket. The new rules tax the real post-2027 gain at your full marginal rate; the higher the rate, the more a fast-growing property pays after 2027.
• A low-income year is coming. Both regimes tax at your marginal rate in the year of sale. A sale in a year you take leave, retire or take a lower salary can matter more than which side of 1 July 2027 it falls.
• You hold through a trust. The minimum tax rules for discretionary trusts have their own wrinkles; model it with your accountant rather than from this page.

Before You Call an Agent

• Put your property through the sale profit calculator at a 2027 sale year and a 2029 sale year, at the growth rate you actually believe.
• Estimate the tax on each with the CGT calculator — choose "Held on 30 June 2027, selling after", enter your 30 June 2027 value, and it computes the split.
• Record your property's value around 30 June 2027 — a valuation, an appraisal, comparable sales. You will need it whenever you sell.
• If you would buy again, add the re-entry stamp duty and the negative-gearing position of the replacement to the pre-2027 side of the ledger.
• Confirm the timing with a registered tax agent. The rules are settled; how they land on your income, structure and history is not something a calculator can decide.

Frequently Asked Questions