CGT Cost Base Indexation Calculator

The 2026 Federal Budget replaces the current 50% CGT discount with an inflation indexation model from 1 July 2027.

Under the current system, investors who hold property for more than 12 months can reduce their taxable capital gain by 50%. Under the new rules, the property cost base will instead increase in line with inflation, and tax will apply to the remaining real gain.

This changes how future investment property gains are taxed across Australia.

The changes may significantly affect after-tax profits when selling investment property.

Many Australian investors built long-term strategies around the 50% CGT discount. The new framework changes the way gains are calculated, which may increase taxable gains for properties that have grown strongly in value.

For many investors, yes.

Properties with capital growth well above inflation may produce higher taxable gains under the new system compared to the current 50% discount method. The impact will depend on:

• Property growth rate
• Inflation over the ownership period
• Holding period
• Purchase and selling costs

Inflation indexation adjusts the property’s cost base over time using inflation data.

Instead of reducing the gain by a flat percentage, the indexed cost base increases gradually. Tax is then applied to the gain above inflation.
This means the new system focuses on taxing “real” capital growth rather than nominal growth.

Long-term investors may see the largest shift in tax outcomes.

Under the old rules, a property held for decades still received the same 50% discount. Under the new framework, the benefit depends on inflation during the ownership period.

High-growth investment properties may therefore face larger taxable gains.

Yes. The reforms change the long-term tax outcome for negatively geared investment properties.

Many investors previously relied on future discounted capital gains to offset years of holding costs. The new CGT framework changes that equation by replacing the flat discount with inflation indexation.

The Federal Budget also introduces a 30% minimum effective tax rate on net capital gains.

This may reduce the effectiveness of some tax planning strategies previously used to lower CGT on property sales.

Trusts may still offer asset protection and estate planning benefits, but the CGT outcome may change under the revised framework.

Property investors using trusts may need to review existing ownership structures and future acquisition strategies.

In most cases, yes.

The main residence exemption is still expected to apply to owner-occupied homes. However, partial CGT may still apply if:

• The property was rented out
• Part of the home was used to produce income
• The property was not the owner’s main residence for the full ownership period

The Federal Budget also introduces a 30% minimum effective tax rate on net capital gains.

This may reduce the effectiveness of some tax planning strategies previously used to lower CGT on property sales.

Trusts may still offer asset protection and estate planning benefits, but the CGT outcome may change under the revised framework.

Property investors using trusts may need to review existing ownership structures and future acquisition strategies.

In most cases, yes.

The main residence exemption is still expected to apply to owner-occupied homes. However, partial CGT may still apply if:

• The property was rented out
• Part of the home was used to produce income
• The property was not the owner’s main residence for the full ownership period

The reforms may influence investor behaviour across the property market.

Some investors may reconsider:

• Long-term holding strategies
• Portfolio restructuring
• Timing of property sales
• Future investment purchases
• Trust ownership structures

The changes place greater focus on after-tax returns rather than relying heavily on discounted capital growth.

A CGT calculator can help property investors estimate how the new rules may affect future tax outcomes.

This includes modelling:

• Inflation-adjusted cost bases
• Estimated taxable gains
• Different holding periods
• Property growth scenarios
• Potential tax payable under the revised framework

This helps investors better understand the possible impact of the Federal Budget CGT changes before selling an investment property.