Capital Gains Tax on Property Australia 2026: 50% Discount Explained
CalculatorQuest Editorial Team
Australian Tax & Finance Specialists
Selling an investment property (or a home that does not fully qualify for the main residence exemption)? Capital gains tax (CGT) is not a separate tax — the gain is added to your income and taxed at your marginal rate. For most individuals who held the property more than 12 months, the 50% CGT discount halves the taxable gain.
Estimate yours: free CGT calculator Australia.
The CGT formula (property)
Taxable gain (12+ months) ≈ Capital gain × 50%
Tax ≈ Taxable gain × your marginal rate (+ Medicare)
What goes into the cost base?
- Purchase price
- Stamp duty and conveyancing on purchase
- Capital improvements (not routine repairs)
- Selling costs (agent fees, legal fees)
Keep records for every improvement — a higher cost base means a lower capital gain. Stamp duty paid when you bought can be material; see stamp duty on an $800k house.
Worked example
Bought investment unit for $700,000 (plus $30,000 duty/fees). Sold for $950,000 after 5 years with $25,000 selling costs. Cost base ≈ $730,000. Gain ≈ $950,000 − $25,000 − $730,000 = $195,000. With the 50% discount, taxable gain ≈ $97,500. At a 37% marginal rate (+ Medicare), tax is roughly in the mid-$30,000s — exact liability depends on your other income.
Illustrative only. Companies and assets held ≤12 months generally do not receive the 50% discount.
Main residence exemption
Your home is often fully exempt if it was your main residence for the entire ownership period and you did not use it to produce income. Partial exemptions apply if you rented it out, moved and kept it as a main residence under the absence rules, or used part of it for business. This is a high-stakes area — get advice for your facts.
Progressive rates: you only pay each rate on income inside that band. Lower bracket is 15% from 1 July 2026 (was 16% in 2025–26).
Because CGT is taxed at your marginal rate, the same property sale costs far more in tax at $190k+ income than at $80k. Timing a sale across financial years (or using carry-forward capital losses) can matter.