CGT indexation post-1 July 2027. Split-treatment, the 30% floor, and the new-build election.

How CGT works today (pre-1 July 2027)

Under current rules, if you sell an investment property held more than 12 months, only 50% of the capital gain is taxable. It gets added to your income for that year and taxed at your marginal rate.

The 50% discount effectively halves the tax bill on a long-held property. It's the single most valuable feature of the Australian CGT regime for property investors.

How CGT works from 1 July 2027

For property acquired after 12 May 2026 7:30pm AEST, or for the post-1 July 2027 portion of any gain on properties held through the cutoff, the 50% discount is replaced with:

1. Cost-base indexation. Your original purchase price adjusts upward for CPI over the holding period. Only the gain above CPI-adjusted cost is taxable.
2. 30% minimum inclusion. Whatever the CPI calculation shows, at least 30% of the raw gain is included as taxable. Prevents zero-tax outcomes in high-inflation scenarios.

Same example, under new rules

Slightly more tax than the old regime in this scenario ($57k vs $53k). If inflation had been lower (say 2%), the indexation allowance would have been smaller and the indexed gain larger, so the 30% floor would bind less, and the modelled tax bill moves with the CPI series used; the illustration should be re-run at the chosen rate before relying on it, and an accountant confirms the position.

Split-treatment for pre-cutoff holdings

This is where it gets interesting. If you own a property that spans the 1 July 2027 cutoff, your gain is split into two portions:

• Pre-cutoff portion: capital gain accrued from purchase to 30 June 2027. Old 50% discount rule applies.
• Post-cutoff portion: capital gain accrued from 1 July 2027 to sale. Indexation + 30% floor applies.

Worked example

Total CGT under split-treatment: $145,026. Under the pre-reform regime (50% discount on the whole gain) the same gain would have attracted about $145,700 in the model, so the two methods are close for this holding period and inflation combination.

The 30 June 2027 valuation matters

Notice the whole calculation above hinges on the 30 June 2027 valuation of $850k. That number splits which portion of your total gain goes into "legacy" versus "new-regime" buckets.

If you don't have a professional valuation dated 30 June 2027, the ATO's default fallback is straight-line time apportionment. Meaning the gain is split proportionally to holding period.

In this illustration the two split methods differ by about $7,000. Whether a valuation is relevant to any owner is a question for their accountant. On typical portfolio sizes, that number scales rapidly.

The new-build election

Owners of qualifying new-build properties can elect to apply the old 50% discount to the entire gain, even for the post-1 July 2027 portion. This is a permanent election made at sale, not at purchase.

New-build qualification (same as the negative gearing carve-out):

• Vacant land with new dwelling constructed
• Demolition + replacement with greater dwelling count (e.g. house → 3-unit block)
• Does NOT include knock-down-rebuild same-count
• Does NOT include substantial renovations of existing dwelling

This carve-out is designed to steer investor demand toward new housing supply. It also creates a modelling variable: if you have new-build eligibility, you have optionality on the sale.

What the model can show

1. How holding period changes the modelled tax result

Under the old regime, a longer hold usually reduced the modelled tax as a share of the gain. Under the new regime, the maths depends on inflation trajectory and your marginal rate at sale. Two identical properties with different holding periods can produce very different CGT outcomes now.

2. A 30 June 2027 valuation: why it may matter

Under the proposed rules a valuation at the cutoff may establish the split point for a later sale. Whether you need one is a question for your accountant.

3. How a pre-cutoff sale compares in the model

The model shows how a sale before 1 July 2027 compares with a later sale under the proposed rules, at your inputs. Whether to sell, and when, is a decision for you with your accountant.

4. Track your own CPI series

The indexed cost base grows with CPI. If you're doing back-of-envelope modelling, use the ABS quarterly CPI series. StratMap bakes in the exact ABS data through 2026 and projects forward using RBA target inflation.

Common misconceptions

"The 50% discount is being abolished"

Not exactly. It stays for pre-cutoff gains on properties you already own. It's replaced only for post-cutoff acquisitions and the post-cutoff portion of legacy holdings.

"I need to sell before 1 July 2027 to keep the discount"

As announced, the pre-cutoff portion of a gain is proposed to keep the discount even on a later sale. The cutoff affects when the calculation methodology changes, not when the tax treatment expires.

"New build gets a permanent 50% discount"

Only if you elect it at sale. The election is available, not automatic. The model shows both options at disposal. Which election applies, and whether it is available, is for your accountant to confirm.

"Cost-base indexation is a new invention"

It's actually a return to pre-1999 CGT rules. Indexation was the original CGT mechanic; the 50% discount replaced it as a simplification. The 2026 reform reintroduces indexation with the modernisation of a 30% minimum floor.