CGT Under the New 2027 Rules: 6 Worked Examples for Property Owners

The new CGT rules announced in the 2026-27 Budget replacing the 50% discount with CPI cost base indexation and a 30% minimum effective tax rate sound abstract on paper. In practice, whether you pay more or less tax depends almost entirely on three variables: your asset's growth rate, the length of time you hold it, and your marginal tax rate at sale. The best way to understand the new system is to walk through real numbers.

This article works through six detailed examples five drawn from Treasury's official Budget factsheets, plus one grandfathered case we have added to show how pre-2027 ownership periods interact with the new rules. The figures here are not estimates; they are the worked outcomes Treasury used to model the reform. If you are new to investment-property tax altogether, our beginner's guide to property investment covers the underlying mechanics first.

Example 1: Zoe shares, low return, 5-year hold

Zoe buys shares for $100 on 1 July 2027. Five years later, on 1 July 2032, she sells them for $125. Her annual return is 4.6%; inflation over the same period averages 2.5%.

Under the 50% discount (old rules)

Capital gain = $125 − $100 = $25. After the 50% discount, taxable gain = $12.50, which Zoe would round to $13 on her tax return.

Under the new indexed regime

Indexed cost base = $100 × (1.025)⁵ = $113. Taxable gain = $125 − $113 = $12.

Outcome: Zoe pays tax on $12 instead of $13. She is better off under the new rules.Even on a low return like 4.6%, indexation strips out the inflation component and Zoe's marginal-rate tax bill is slightly lower.

Example 2: Ben property, 2.5% return, 10-year hold

Ben owns an investment asset worth $500,000 that grows at exactly the rate of inflation 2.5% per year for ten years. After ten years it is worth approximately $640,000.

Under the 50% discount

Capital gain = $140,000. After 50% discount: $70,000 taxable. At a 47% marginal rate, tax payable is approximately $32,900.

Under the new indexed regime

Indexed cost base = $500,000 × (1.025)¹⁰ ≈ $640,000. Real gain ≈ $0. Tax payable: approximately $8,042 (small residual due to rounding and partial-year CPI).

Outcome: Ben pays $24,858 LESS under the new rules. Because his asset only kept pace with inflation, he had no real economic gain and indexation correctly recognises that. Under the old 50% discount system, he was being taxed on a gain that, in real terms, did not exist.

Example 3: David property, 5% return, 10-year hold

David's $500,000 asset grows at 5% per year for ten years, reaching approximately $814,000. This is a moderately healthy long-term return.

Under the 50% discount

Capital gain = $314,000. Discounted: $157,000. Tax at 47% = approximately $73,790.

Under the new indexed regime

Indexed cost base = $500,000 × (1.025)¹⁰ ≈ $640,000. Indexed gain = $174,000. Tax at 47% = approximately $81,865.

Outcome: David pays $8,075 MORE under the new rules. Once returns rise meaningfully above inflation, the loss of the 50% discount outweighs the benefit of indexation. David's case is the inflection point for most property investors, growth above 5% will mean paying more.

Example 4: Kate property, 7.5% return, 10-year hold

Kate's $500,000 investment grows at 7.5% per year typical of well-located Sydney or Melbourne houses over the past decade reaching approximately $1.03 million after ten years.

Under the 50% discount

Capital gain = $530,000. Discounted: $265,000. Tax at 47% = approximately $124,550.

Under the new indexed regime

Indexed cost base ≈ $640,000. Indexed gain = $390,000. Tax at 47% = approximately$183,300.

Outcome: Kate pays $58,851 MORE under the new rules. High-growth assets are the clearest losers from the reform. The 50% discount was particularly generous for them; indexation which only adjusts for 2.5% inflation strips out a much smaller share of the gain.

Example 5: Jane transitional case

Jane bought an asset for $800,000 in July 2022. She sells it in July 2032 for$1.6 million. Annual return: 7.2%. Five of her ten years of ownership are before 1 July 2027 (50% discount applies) and five are after (indexed regime applies).

Step 1 value at 1 July 2027

Using the ATO apportionment formula at 7.2% growth, the value at 1 July 2027 is approximately$1,131,371.

Step 2 pre-2027 gain (50% discount)

Gain to 1 July 2027 = $1,131,371 − $800,000 = $331,371. After 50% discount = $165,685taxable.

Step 3 post-2027 gain (indexed)

Indexed cost base at sale = $1,131,371 × (1.025)⁵ ≈ $1,280,042. Gain = $1,600,000 − $1,280,042 = $319,958 taxable.

Step 4 total tax

Total taxable = $485,643. At 47% marginal rate: $228,252 in tax.

Under the old 50% discount applied across the whole period, total taxable would have been $400,000 → tax of $188,000. Jane pays $40,252 more under the transitional rules.High-growth assets owned across the transition pay more, but only on post-2027 gains the pre-2027 portion is fully grandfathered.

Example 6: Michael grandfathered pre-2027 sale

Michael purchased an investment unit for $650,000 in 2018. By June 2027 it is worth $910,000. He sells in May 2027 before the new rules commence.

Capital gain = $260,000. After 50% discount: $130,000 taxable. At 39% marginal rate (after Medicare levy), tax = approximately $50,700.

Because Michael sells before 1 July 2027, the entire gain attracts the old 50% discount with no indexation considerations and no 30% minimum tax. For high-growth assets being sold close to the transition date, accelerating into the 2026-27 financial year can save material amounts but only if you were planning to sell anyway. Selling purely to dodge the reform is usually a mistake because you forfeit future capital growth and incur transaction costs.

What the examples tell us

This article provides general information about the 2026-27 Federal Budget CGT reform measures announced for commencement on 1 July 2027 and is not financial, tax or legal advice. Tax outcomes depend on individual circumstances. Always consult a registered tax agent, financial adviser or the Australian Taxation Office before acting. Treasury factsheets and the official Budget Papers remain the authoritative source.