Question 1

How is capital gains tax calculated on property in Australia?

Accepted Answer

CGT is calculated on the difference between your sale proceeds (minus selling costs) and your cost base (purchase price plus stamp duty, legal fees, and capital improvements). The taxable gain is then added to your income and taxed at your marginal rate. A 50% discount applies if you held the property for 12+ months.

Question 2

What is the 50% CGT discount?

Accepted Answer

Individual taxpayers who hold a CGT asset for at least 12 months before selling are eligible for a 50% discount on the capital gain. This means only half the gain is included in your taxable income. Companies are not eligible for this discount.

Question 3

What costs can I include in my cost base?

Accepted Answer

Your cost base includes the purchase price, stamp duty, conveyancing and legal fees at purchase, capital improvements (renovations, extensions, structural work), and any other incidental costs of acquiring or improving the asset. Repairs and maintenance cannot be included.

Question 4

Is my main residence exempt from CGT?

Accepted Answer

Yes, your principal place of residence (PPOR) is generally fully exempt from CGT under the main residence exemption. However, if you rented it out or used it to produce income for any period, a partial exemption may apply based on the proportion of time it was your PPOR.

Question 5

Are properties purchased before 1985 subject to CGT?

Accepted Answer

No. Properties acquired before 20 September 1985 are generally exempt from CGT. However, capital improvements made after this date may be subject to CGT in some circumstances.

Question 6

How can I minimise capital gains tax on property?

Accepted Answer

Strategies include holding for 12+ months to qualify for the 50% discount, maximising your cost base by including all eligible costs and improvements, timing the sale to a financial year when your income (and marginal rate) is lower, and considering partial exemptions if the property was your PPOR for part of the ownership period.

Capital Gains Tax Calculator (2026)

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Frequently asked questions

How is capital gains tax calculated on property in Australia?

What is the 50% CGT discount?

What costs can I include in my cost base?

Is my main residence exempt from CGT?

Are properties purchased before 1985 subject to CGT?

How can I minimise capital gains tax on property?

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