Capital gains tax is part of income tax rather than a separate transaction tax. The taxable outcome can depend on acquisition and sale dates, ownership, use, residency, records and reforms applying from 1 July 2027.
The current 50% discount
Under current rules, eligible Australian resident individuals and trusts can generally reduce a capital gain by 50% after holding the CGT asset for at least 12 months. Companies cannot use the general 50% discount.
Capital losses are applied before the discount, and foreign or temporary residency periods can change access. Keep acquisition, improvement and sale-cost records.
Main residence and absence rules
A home that qualifies as your main residence for the whole ownership period may be exempt. Income-producing use, multiple homes, land size, moving dates and foreign residency can create a partial or lost exemption.
The so-called six-year rule can allow a former home used to produce income to continue being treated as a main residence for up to six years at a time, subject to conditions and choices.
Withholding at settlement
For contracts from 1 January 2025, foreign resident capital gains withholding is 15% and applies to all Australian real property values unless the vendor provides a valid ATO clearance certificate or variation.
Australian resident vendors should obtain the clearance certificate early. Withholding is not necessarily the final tax liability; it is a credit dealt with through the tax return.
Reform from 1 July 2027
The 2026–27 reform replaces the existing discount with inflation-based cost-base treatment and a 30% minimum tax rate on relevant capital gains. It applies to gains accruing from 1 July 2027 when realised.
Investors acquiring qualifying new builds can choose between the existing 50% discount and the new arrangements. Detailed second-stage provisions were still under consultation on 10 August 2026, so advice should be based on final legislation.
Common questions
Is the family home always exempt from CGT?+
No. It must satisfy main-residence requirements, and rental use, business use, foreign residency, land over two hectares or periods covered by another home can affect the exemption.
Is the 50% CGT discount ending immediately?+
No. The announced replacement begins on 1 July 2027 with transitional rules. The tax impact depends on when gains accrue and the final legislation.
Is the 15% settlement withholding the actual CGT bill?+
Not necessarily. It is a withholding credit. The vendor’s final tax outcome is calculated through the income tax return.
This guide does not consider your objectives, financial situation or needs. Lending policies, government programs and thresholds can change. Obtain current credit, legal, tax or financial advice as appropriate.