Capital Gains Tax Changes 2027: Sell Before 1 July?
Capital gains tax changes 2027 are on the way for individuals, trusts and partnerships. From 1 July 2027, cost base indexation and a new 30% minimum tax on real gains will replace the 50% CGT discount. Many business owners assume they need to sell before the deadline to keep the discount. That is not the case, and rushing to sell now could turn out to be an expensive mistake.
Your gains up to 30 June 2027 are protected
The new rules treat assets you hold on 30 June 2027 as sold at market value on that date. They then treat you as buying those assets back the next day. You do not pay any tax at that point.
Instead, the gain you build up to 1 July 2027 locks in, and it keeps the 50% discount whenever you actually sell. Only the growth that happens after that date falls under the new indexation and minimum tax rules. So, holding past the deadline does not cost you the discount you have already earned. Several advisers warn that rushing to sell purely to beat the deadline is one of the costliest mistakes investors make.
We flagged this possibility well before it was legislated, back when it was still just a Senate inquiry — see our earlier article, The 50% CGT discount – changes afoot?, for that background.
A worked example
For example, say you bought an investment property in 2016 for $500,000, and by 30 June 2027 it is worth $900,000, a $400,000 gain. Under the new rules, that $400,000 gain locks in and still qualifies for the 50% CGT discount. It doesn’t matter when you eventually sell.
Say you sell in 2030, and the property has grown to $1,000,000 by then. The extra $100,000 made after 1 July 2027 falls under the new cost base indexation and 30% minimum tax rules. The discount you already earned is not lost.
Capital gains tax changes 2027: who isn’t affected
However, not every asset or taxpayer is caught up in these changes. The new rules carve some out altogether.
New builds can still choose the existing discount, and qualifying affordable housing keeps its discount of up to 60%. The small business CGT concessions remain in place, so eligible business owners are not affected. Income support recipients are exempt from the new 30% minimum tax.
Also, superannuation is unaffected. Super funds continue to receive the one-third CGT discount on capital gains, just as they do now.
So, should you sell before 1 July 2027?
In short, for most people, there is no need to sell simply because the rules are changing. The gain you have made up to 1 July 2027 stays on the old rules, regardless of when you sell.
Your decision to sell should rest on your own plans, asset, income and timeframe, not the calendar. Want to work through what this means for your own portfolio or business assets? Contact us if you need help to plan ahead of the change.