Capital gains tax and the Federal Budget

How capital gains tax works on Australian investment property, how budget proposals could change it, and why only legislated rules should guide sale decisions.

Will the budget change capital gains tax on property?

Capital gains tax applies when you sell an investment property for more than its cost base, with a 50% discount for individuals who held it at least 12 months under current rules. Any change requires legislation. Investors in Sydney, NSW and Australia should plan on current law and model proposals only once details are confirmed.

How CGT is calculated today

The gain is the sale price minus the cost base, which includes purchase price, duty and certain costs. The discounted gain is added to taxable income.

Main residence exemption

Your home is usually exempt, with partial exemptions where it was rented or used for business.

Proposals versus law

Budget announcements are not law until legislation passes, so check budget.gov.au, the ATO and Parliament before acting.

Frequently asked questions

When is CGT payable?

It is included in the tax return for the year the contract was signed.

Do companies get the 50% discount?

No. Companies do not receive the CGT discount.

Can losses offset gains?

Capital losses can offset capital gains, not ordinary income.