How capital gains tax works in Australia
Capital gains tax isn't a separate tax. When you sell an asset for more than it cost you, the gain is added to your taxable income and taxed at your normal rates. Here's how the calculator works it out:
- Capital proceeds: the sale price less selling costs, such as agent fees and legal costs.
- Cost base: the purchase price plus buying costs, such as stamp duty and conveyancing, plus capital improvements.
- Capital gain: capital proceeds minus the cost base.
- Capital losses are subtracted next, then the 50% discount if you held the asset for at least 12 months.
- What's left, the net capital gain, is added to your income and taxed at 2026–27 rates, including the 2% Medicare levy.
The 50% CGT discount
Australian resident individuals and trusts pay tax on only half of a capital gain on an asset they've owned for at least 12 months. The 12 months doesn't count the day you bought or the day of the sale, and for a contract sale the date that matters is the contract date, not settlement.
Complying super funds get a one-third discount, and companies get no discount.
Announced CGT changes from 1 July 2027
In the 2026–27 Federal Budget on 12 May 2026, the Government announced that the 50% CGT discount will be replaced from 1 July 2027. These are announcements, not yet law, and the calculator above uses the current rules.
- Indexation instead of a discount: for assets held more than 12 months, the cost base would be increased by inflation (CPI), similar to the rules before September 1999.
- 30% minimum tax: a minimum 30% tax would apply to real capital gains accruing from 1 July 2027. People receiving income support, including the Age Pension, would be exempt.
- Existing assets: gains built up before 1 July 2027 would keep the 50% discount. Only growth after that date would use indexation, based on the asset's value at 1 July 2027.
- Exclusions: your main residence stays exempt, investors in new residential builds could choose either method, and super funds keep their one-third discount.
If you're planning a sale around mid-2027, the timing of the contract could change your tax. It's worth getting advice from a registered tax agent.
Selling your main home
Your home is usually exempt from CGT if you lived in it for the whole time you owned it and didn't use it to produce income. If you rented it out, used part of it for business, or it sits on more than 2 hectares, you may only get a partial exemption. Under the "6-year rule", you can generally keep treating a home as your main residence for up to 6 years after moving out, if you rent it out and don't nominate another main residence.
Worked examples
Selling an investment property after 3 years. Bought for $500,000 plus $20,000 costs, sold for $700,000 less $15,000 costs: a $165,000 gain. The 50% discount leaves $82,500, added to $90,000 of salary. Estimated tax is $29,025, leaving $135,975 profit after tax.
Selling shares after 2 years. A $15,000 gain is halved to $7,500. On a $70,000 salary that's taxed at 32% including Medicare: about $2,400.
The same shares sold after 10 months. No discount, so the full $15,000 is taxed: about $4,800. Waiting two more months would save $2,400.
Using a capital loss. A $5,000 loss from other shares reduces the $15,000 gain to $10,000 before the discount, so only $5,000 is taxed: about $1,600.
Common questions
How is capital gains tax calculated in Australia?
Your capital gain is what you receive from the sale, less selling costs, minus your cost base: what you paid plus buying costs and capital improvements. If you held the asset for at least 12 months, an Australian resident individual only pays tax on half the gain. The taxable part is added to your income for the year and taxed at your marginal rate.
What's the CGT discount, and is it changing?
Australian resident individuals and trusts can halve a capital gain on assets held for at least 12 months. In the 2026–27 Budget, the Government announced it will replace the discount with inflation indexation and a 30% minimum tax from 1 July 2027. Sales up to 30 June 2027 still get the 50% discount. The change isn't law yet.
Do I pay CGT when I sell my home?
Usually not. Your main residence is generally exempt if it was your home for the whole time you owned it and you didn't use it to produce income. If you rented it out or ran a business from it, a partial exemption may apply.
When is the capital gain counted for tax?
For a sale with a contract, the CGT event happens on the contract date, not settlement. So a property you sign to sell in June 2027 falls in the 2026–27 income year, even if it settles in July.
What costs can I include in the cost base?
The purchase price, stamp duty, legal and conveyancing fees, buyer's agent fees, and capital improvements like renovations or extensions. Selling costs, such as agent commission, advertising and legal fees, reduce your capital proceeds. Costs you've already claimed as deductions generally can't be counted again.
Can capital losses reduce my CGT?
Yes. Capital losses are subtracted from capital gains before the 50% discount is applied, and unused losses carry forward to future years. Capital losses can't be deducted from your salary or other income.
Does crypto count?
Yes. The ATO treats cryptocurrency as a CGT asset for most people, so selling, swapping or spending crypto can create a capital gain or loss, with the same 12-month discount rule.
What about foreign residents?
Foreign residents can't use the full CGT discount for gains made after 8 May 2012, and they can't claim the main residence exemption in most cases. This calculator is for Australian residents.
Sources
- ATO: CGT discount
- ATO: tax rates for Australian residents 2026–27
- EY: Australia's 2026–27 Federal Budget
- Forvis Mazars: 2026–27 Federal Budget brief
This calculator gives an estimate for Australian resident individuals and assumes the asset is held in your own name. It doesn't cover partial main residence exemptions, depreciation recapture, small business concessions, trusts, companies or super funds. For your actual tax, ask a registered tax agent.