Capital gains tax on property in Australia: how CGT works

The basic calculation

• Start with your capital proceeds — usually the sale price
• Subtract your cost base — purchase price plus eligible costs such as stamp duty, legal fees and selling costs
• Subtract any capital losses
• If you are an Australian resident individual who owned the asset for at least 12 months, halve the remaining gain (the 50% CGT discount)
• The result is added to your taxable income and taxed at your marginal rate

The 50% CGT discount

Australian resident individuals who own an asset for at least 12 months before the CGT event pay tax on only half the net capital gain. For property sales, the CGT event is usually the contract date, not settlement. The 12-month test excludes the day you acquired the asset and the day of the CGT event.

Companies are not eligible for the discount, and different rules apply to foreign residents and some trusts.

The main residence exemption

Your home is generally exempt from CGT if it was your main residence for the whole ownership period, was not used to produce income, and is on land of 2 hectares or less.

If you move out, you can keep treating it as your main residence for up to 6 years while it is rented (the '6-year rule'), or indefinitely if it is not used to produce income. Foreign residents generally cannot claim the main residence exemption for sales after 30 June 2020, except in limited circumstances.

Estimate your CGT

The ATO provides a free capital gains tax property exemption tool that estimates your exemption and capital gain in 5–10 minutes. Use it for guidance, then confirm the figures with your accountant before lodging your return.

Note: CGT changes announced in the 2026–27 Federal Budget do not apply to Tax Time 2026. Check the ATO website for when any new rules take effect.