Capital gains tax (CGT) is the tax you pay on the profit from selling a property that isn’t exempt — most commonly an investment property. It is not a separate tax with its own rate. Your net capital gain is added to your assessable income for the year and taxed at your marginal income tax rate, the same schedule that applies to your salary.

The core calculation is one subtraction:

capital proceeds − cost base = capital gain

Everything else — exemptions, discounts, the changes enacted in June 2026 that apply to CGT events from 1 July 2027 — is an adjustment to one side of that equation. This guide works through each piece.

What is capital gains tax?

CGT is the income tax you pay on profits from disposing of assets. When a “CGT event” happens — the most common being the sale of an asset — you compare what you received with what the asset cost you. A profit is a capital gain. A shortfall is a capital loss.

The ATO’s capital gains tax guidance lists every event; for property owners, disposal is the one that matters. The event generally occurs on the date you sign the contract of sale, not the date of settlement. That timing decides which financial year the gain lands in — and which rules apply to it.

Two more basics before the arithmetic. First, your main residence — the family home — is generally exempt, though the exemption has edges covered below. Second, giving a property away does not sidestep the tax. A transfer to a family member is treated as a disposal at market value — CGT is worked out as if the property had been sold at that price, whatever money actually changed hands.

How is CGT calculated when you sell a property?

The calculation runs in a fixed order:

1. Work out your capital proceeds. Usually the sale price. If the sale isn’t at arm’s length — a transfer to family, for instance — market value is substituted.
2. Work out the cost base. What the property cost you, in the broad sense set out in the next section.
3. Subtract. Proceeds minus cost base gives the capital gain. If the result is negative (calculated against a slightly different “reduced cost base”), you have a capital loss.
4. Apply capital losses. Losses from the same year, and unused losses carried forward from earlier years, reduce the gain.
5. Apply any discount or indexation you are eligible for. The settings are covered in the discount section below.
6. Add the net capital gain to your assessable income. It is then taxed at your marginal rate in that year’s return.

One point trips people up: capital losses only offset capital gains, never salary or other ordinary income. Unused losses carry forward to future years until later gains absorb them.

What counts as the cost base of a property?

The cost base is broader than the purchase price — and every dollar legitimately added to it reduces the eventual gain. The ATO’s cost base guidance groups it into five elements:

Element	What it covers	Property examples
1. Acquisition cost	What you paid for the asset	Purchase price
2. Incidental costs	Costs of buying and selling	Stamp duty, conveyancing, agent’s commission, marketing
3. Ownership costs	Certain holding costs not otherwise claimed as deductions	Interest, rates, insurance, repairs — eligibility rules are detailed
4. Capital improvements	Spending that adds value	Renovations, extensions, new fencing
5. Title costs	Establishing or defending ownership	Legal fees in a boundary dispute

The cost base is not fixed at purchase, either. Amounts claimed as capital works deductions — the annual write-off for a building’s construction cost, claimed under Division 43 at 2.5% a year over 40 years for residential rental construction commenced on or after 16 September 1987 (as at July 2026) — generally reduce the cost base, so a property with a depreciation schedule has a lower cost base than its receipts suggest. Here is the shape of that adjustment for a hypothetical rented dwelling — structure only, because every dollar figure depends on the property:

Stage	Effect on the CGT position
Buy	Cost base starts at the purchase price plus incidental costs (elements 1 and 2 above)
Own and rent	Capital works deductions claimed each year progressively reduce the cost base
Sell	Proceeds − the reduced cost base = the capital gain, so amounts written off along the way come back as a larger gain

And if a home you lived in later becomes income-producing — you move out and rent it — the cost base is generally reset to the property’s market value on the day it first earns income; the ATO’s rule for a home first used to produce income covers the mechanics.

How does the CGT discount work for property investors?

Hold a property for at least 12 months — excluding both the day you acquired it and the day of the CGT event — and, as an Australian resident individual, you can reduce the taxable gain by 50%. The order matters: capital losses are applied first, and the discount then applies to what remains. As at July 2026, the ATO’s CGT discount settings by owner type, for CGT events before 1 July 2027, are:

Owner type	Discount treatment
Individual (Australian resident)	50%, where the asset is held at least 12 months (excluding the acquisition day and the day of the CGT event)
Trust	50%, under the same 12-month test
Company	No discount — companies pay tax on the whole capital gain
Super fund	33.33% for complying superannuation funds

Under the changes enacted in June 2026, these discount settings end for most CGT events on or after 1 July 2027 — the 2027 section below summarises what replaces them.

Joint owners calculate CGT separately. Each person applies the calculation to their share of the property as recorded on the title, so a couple holding equal shares each return half of any gain at their own marginal rate.

Tax outcomes depend on your circumstances — speak with a registered tax agent before acting.

When is a property exempt from CGT?

The main residence exemption is the big one. A home that was your main residence for the whole time you owned it, and was not used to produce income, is generally fully exempt from CGT — the ATO’s main residence exemption guidance sets out the tests.

The edges of that exemption are where care is needed:

• The absence rule. Move out of your main residence and you can keep treating it as your main residence for CGT purposes — for up to 6 years at a time while the home produces income (the “six-year rule”), or indefinitely if it does not. The 6-year limit resets each time you re-occupy the home and later move out again, and you generally cannot treat another property as your main residence for the same period (beyond a 6-month overlap when moving between homes). The ATO’s guidance on treating a former home as your main residence sets out the tests.
• Partial income use. Rent out part of the home, or run a business from it, and a corresponding part of the gain can become taxable.
• Pre-CGT property. Assets acquired before 20 September 1985 — when CGT commenced — sit outside the regime, although major capital improvements made after that date can be taxed as separate assets. Under the Act enacted in June 2026, gains accruing on pre-CGT assets after 1 July 2027 come into the CGT net.

What is changing for property CGT on 1 July 2027?

Under the changes enacted in June 2026 — the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which received royal assent on 26 June 2026 — the rules above change for CGT events on or after 1 July 2027. In summary:

• The 50% discount ends for individuals, trusts and partnerships. It is retained for new residential dwellings and qualifying affordable housing, and complying super funds keep the 33.33% discount.
• CPI indexation of the cost base returns, adjusting most cost base elements for inflation instead of discounting the gain (ownership costs are excluded from indexation).
• A minimum 30% tax applies to residential and non-residential capital gains under a new Division 119, with new dwellings excluded.
• Transition valuation. Assets held on 30 June 2027 are treated as sold and reacquired at market value just before 1 July 2027 — or an apportionment method can be applied instead — so gains built up before the changeover keep the old treatment.

That is deliberately a summary; the enacted Act and ATO guidance carry the detail.

The practical point stands regardless of the detail: which rules apply to a sale depends on when the CGT event occurs. ATO guidance and a registered tax agent are the reliable ways to confirm how the transition applies to a specific holding.

What records make a CGT calculation easier?

Every element of the cost base has to be substantiated, so the paper trail starts the day you buy — not the day you sell. The documents that typically decide the size of a property CGT bill:

• the contract of sale and settlement statement from the purchase
• stamp duty and conveyancing receipts
• invoices for renovations, extensions and improvements
• agent’s commission and marketing invoices from the sale
• depreciation and capital works schedules, which show the amounts that reduce the cost base
• a market valuation from any date the property’s use changed — for example, when it first earned income

The ATO’s record-keeping rules for property CGT require records to be kept for the whole period you own the property, plus at least 5 years after you dispose of it. Missing records generally mean a lower cost base and a larger taxable gain, because unsubstantiated costs cannot be counted.

How are Brix taxed compared with a directly held property?

The two are different kinds of assets, which is why the question has no one-line answer. A directly held investment property is a CGT asset in your hands, subject to the rules above. A Brix is a fractional economic interest in a property — a financial product under the Corporations Act, not ownership of the property itself — and the owner remains the registered legal owner. How each is taxed depends on the structure and on your circumstances, so the Product Disclosure Statement and a registered tax agent are the places to confirm your position.

Under the MyBrix Product Disclosure Statement current as at July 2026 (version 4.0), each property is divided into 10,000 Brix representing all of its economic benefits — future net sale proceeds and, where applicable, net rental proceeds. Under that PDS, investors pay no fee to open an account, no fees to purchase or hold Brix, and no stamp duty on purchase.

For the mechanics of each approach, see our guide to property investment in Australia and our explainer on fractional property investment.