Calculate capital gains tax on your Australian investment property sale, including the 50% discount.
How Property CGT Works in Australia
Capital Gains Tax (CGT) is not a separate tax — it's part of your income tax. When you sell an investment property for more than you paid (including costs), the profit is called a capital gain and is added to your assessable income for the year of sale, then taxed at your marginal rate.
The Cost Base
Your cost base is everything you paid to acquire, hold, and improve the property — as long as you haven't already claimed those amounts as tax deductions. It includes:
- Purchase price
- Stamp duty and legal fees on purchase
- Capital improvements (extensions, renovations — not repairs)
- Selling costs (agent commissions, legal fees on sale)
- Certain holding costs not previously deducted (rates, insurance — only if the property was never income-producing)
The 50% CGT Discount
If you held the property for more than 12 months, you only include 50% of the capital gain in your taxable income. This is one of the most significant tax advantages in Australian property investment. For a $200,000 capital gain, only $100,000 is added to your income and taxed.
Marginal Tax Rates (2024–25)
- Up to $18,200: 0%
- $18,201–$45,000: 16%
- $45,001–$135,000: 30%
- $135,001–$190,000: 37%
- Over $190,000: 45%
Plus 2% Medicare Levy on most income above the threshold.
Frequently Asked Questions
How do I reduce CGT on an investment property?
Strategies to reduce CGT include: holding the property for more than 12 months (50% discount), selling in a low-income year (e.g. retirement), offsetting gains with capital losses, timing the sale to spread across two financial years, and maximising your cost base by including all eligible costs.
Is there CGT on my main residence?
Your main residence is generally exempt from CGT. However, the exemption may be partial if you rented the property, ran a business from home, or were absent for extended periods. The 6-year rule allows you to be absent for up to 6 years without losing the exemption, provided you don't treat another property as your main residence.
When do I need to pay CGT?
CGT is reported in your tax return for the financial year in which you entered into the sale contract (not settlement). Tax is due by 31 October (or your tax agent's lodgement date) for the relevant income year.
Can I put off paying CGT by buying another property?
No. Unlike the US 1031 exchange, Australia does not have a CGT rollover for investment property. You pay CGT in the year of sale regardless of whether you reinvest the proceeds. The only way to defer CGT is to not sell.
What is the CGT rate in Australia?
There is no separate "CGT rate." The taxable portion of your capital gain is added to your other income and taxed at your marginal income tax rate. At the top marginal rate of 47% (including Medicare Levy), a $100,000 taxable gain results in $47,000 tax. With the 50% discount applied before the gain is $100,000, you'd only pay CGT on $50,000.