Selling Before or After 1 July 2027: One Gain, Taxed Two Ways

A $720,000 investment house that grows at 6% a year is worth $1,289,410 ten years later. The capital gain is $569,410. If the sale happens on or before 30 June 2027, half of that gain is taxable: $284,705. If the whole ten-year hold falls after 1 July 2027, the taxable gain on the same house, same price and same growth is $367,749, assuming inflation of 2.5% a year. That is $83,044 more income to pay tax on, and nothing about the property has changed.

Most investors selling in the next few years will sit somewhere between those two numbers, because the new rules split a gain at 1 July 2027 instead of switching it over. This post works through all three positions.

What the law says

The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received royal assent on 26 June 2026. The capital gains changes in it do not apply yet. They start on 1 July 2027. Treasury's Budget explainer on negative gearing and capital gains tax reform sets out the mechanics:

• Gains accrued before 1 July 2027 keep the 50% discount. The discount applies to the difference between the cost base and the asset's value at 1 July 2027, and the tax is paid when the asset is actually sold.
• Gains accrued from 1 July 2027 lose the discount. The cost base is indexed for inflation, so only the real gain is taxed, and that gain is taxed at a rate of at least 30%. People who receive a means-tested income support payment, such as the Age Pension, in the year of sale are exempt from the minimum.
• New builds are the exception. An investor who buys a new build can choose either the 50% discount or indexation when they sell.

One point is easy to get wrong. The 12 May 2026 cut-off that protects existing owners applies to negative gearing. It does not apply to capital gains tax: Treasury's explainer says that for properties held before the announcement, the reforms apply to gains accruing after 1 July 2027. A property bought years before Budget night still has its growth from 1 July 2027 onward taxed under the new rules.

The setup

One established house, modelled the same way each time:

• Purchase price: $720,000
• Capital growth: 6% a year, the base case in Plintha's finance engine
• Hold: ten years, interest-only loan
• Owner: an Australian-resident individual
• Inflation: 2.5% a year, the rate Treasury uses in its own worked examples

The price, the growth rates and the ten-year gain come from Plintha's engine. That $569,410 is the engine's ten-year equity gain. It is growth in the property's value only. It excludes the deposit, and on an interest-only loan it includes no principal repayments.

The engine does not calculate capital gains tax. The taxable gains below apply Treasury's published method to the engine's growth figures, and the formulas are published alongside this post so anyone can re-run them. To match Treasury's examples, the cost base here is the purchase price alone.

Three sale dates, one property

Sold by 30 June 2027. The current rules apply to the whole gain. Half of $569,410 is taxable.

Held across the date. The house is worth $963,522 on 1 July 2027, five years in. The $243,522 of growth to that point is halved to $121,761. For the second five years, the $963,522 value is indexed at 2.5% a year to $1,090,137, and the taxable amount is the sale price less that figure: $199,273. Together that is $321,034, which is $36,329 more than under the discount alone.

Bought on 1 July 2027. There is no discounted portion. The $720,000 cost base is indexed for ten years to $921,661, and the taxable gain is $367,749.

These are taxable gains, not tax bills. The tax is that amount at the seller's own marginal rates in the year of sale, and a gain this size can push part of it into a higher bracket. The 30% minimum applies only to the real gain accrued from 1 July 2027, and it matters most to sellers whose other income is low.

Why the answer depends on growth

The 50% discount ignores inflation and halves whatever the gain is. Indexation removes the inflation and taxes all of what is left. Which one produces the smaller number depends on how much of the gain was real.

The engine's conservative and optimistic cases, 4% and 8% growth, show this for a hold entirely after 1 July 2027:

At 4% growth the new rules tax $28,773 less than the discount would have. At 8% they tax $215,552 more. The discount was most generous to the fastest-growing assets, and those are the ones that lose most from its removal. An asset that only just beats inflation is better off under indexation.

This is also why the new-build choice has value. On the 6% numbers, a new-build owner choosing the discount has a taxable gain of $284,705, where indexation would give $367,749. At 4% indexation gives the lower taxable gain, $144,115 against $172,888.

What this doesn't tell you

• Whether to sell before 1 July 2027. Selling early does not protect the gain already made. That portion keeps the 50% discount whenever the sale happens. An early sale only changes the treatment of future growth, and it brings forward the tax, the selling costs and, for anyone who buys again, another round of stamp duty.
• The value at 1 July 2027. We used a smooth 6% path. Real prices don't move that way, and the split depends on what the property is actually worth on that date. Treasury's explainer refers to a valuation or a specified apportionment formula that estimates the value from the asset's growth rate over the whole holding period. Our smooth path behaves like that formula; a valuation could give a different split.
• Actual inflation. Indexation uses real CPI, not 2.5%. Higher inflation shrinks the taxable gain under the new rules, and lower inflation enlarges it.
• Your real cost base. Stamp duty, legal fees and selling costs all reduce the gain, and capital works deductions already claimed are generally taken off the cost base. We left all of that out to keep the comparison clean, so every taxable gain above is overstated, and not by the same amount in each column.
• Carried-forward rental losses. For an established property bought after 12 May 2026, rental losses quarantined from 1 July 2027 can be used against the eventual capital gain. That reduces the taxable figure and is not modelled here.

The honest limitation is that nobody knows a sale price ten years out. Growth of 6% is an assumption, not a forecast, and the second table shows how far the answer moves when it changes. What the example does show is the shape of the new rules: growth to 1 July 2027 is treated as before, and growth after it is taxed on a different basis that is harder on strong growth and easier on weak growth.

To see the growth scenarios, holding costs and stamp duty for a specific property, you can run it through Plintha.

This article is general information, not financial, tax, credit or legal advice. It doesn't take into account your objectives, financial situation or needs. Figures use Plintha's engine for the price and growth scenarios and Treasury's published method for the taxable gains, with the assumptions stated above (ten-year hold, interest-only loan, cost base equal to purchase price, assumed inflation) as at 9 October 2026, and will change if any of those inputs change. Check your own position with a registered tax agent before acting.