The 50% capital gains tax discount has anchored Australian property investing for a generation. Buy, hold for a year, and half your gain is tax-free. From 1 July 2027, that rule is gone.
It’s replaced by something more complicated, and for some owners, less generous. This isn’t a proposal working its way through parliament — the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 became law on 26 June 2026. Here’s what changed, what’s protected, and where the line falls.
OFFICIAL PARLIAMENTARY E-PETITION CAMPAIGN
The New CGT Rule That Coming Home Won't Fix - Sign the Petition to Fix the Rule
From 1 July 2027, a single period living overseas can permanently strip your Australian property of inflation protection — even if you move home years before you sell, and even for property you already own.
Takes 60 seconds · Backs the open letter now + the petition when it opens mid-August · Sign from anywhere in the world
Backed by ODIN Tax & ODIN Mortgage — the Australian expat specialists
What the 50% CGT Discount Is (and Why It’s Ending)
Under the current system, if you’re an Australian tax resident and you hold an asset for 12 months or more, only half your capital gain is taxable. On a $500,000 gain, you’re taxed on $250,000, not the full amount. Simple, flat, and the same for everyone who qualifies.
That flat 50% is being retired.
What Changes on 1 July 2027: Indexation Replaces the Discount
Indexation replaces the flat discount. Instead of halving your gain, the new system lifts your cost base in line with inflation. Your “cost base” is what you paid for the asset plus certain costs. Indexing it upward means less of your sale price counts as taxable gain. How much you save depends on how long you held the asset and how much inflation ran over that time — so the benefit is no longer a fixed 50%. Long holds through high-inflation years could potentially do better depending on the situation.
The 12-month holding requirement still applies. Assets sold inside a year get no discount and no indexation, same as today.
New Builds Can Still Choose the 50% Discount
There’s one clear winner in the reform. Investors in new builds can elect between the old 50% discount and the new indexation method — whichever gives the better result. Established second-hand property doesn’t get that choice; it moves to the new rules with no opt-out.
Combined with the negative-gearing changes, this tilts the maths and potential tax incentives toward new builds for investors deciding now. That’s a decision worth its own conversation.
Why Australian Expats are losing on this tax reform
If you spend any time overseas as a non-resident, there’s a second, sharper rule stacked on top of the reform. To access indexation at all, you must not have been a foreign resident at any point during a “testing period” that runs from 1 July 2027 to the day you sell. One posting abroad in that window can disqualify a property from indexation permanently — even if you return to Australia and stay for years before selling.
ODIN is trying to change this. We’re asking Parliament for one fix: apportion indexation for the years you’re an Australian resident — the same pro-rata fairness the 50% CGT discount has had since 2012.
The testing period is severe enough that we’ve broken it out in full here: the CGT indexation testing period, and why coming home no longer fixes it. If you’re an expat with an Australian investment property, read that one next.
Your main residence is treated separately. The main residence exemption and the six-year absence rule are unchanged by this reform.
What This Means for You
If you own an Australian investment property, three questions matter now:
When did you buy it? Anyone holding across the 2027 line has a split calculation to plan for.
When will you sell it? The gap between the old and new treatment depends on your holding period and the inflation over it. For some owners indexation beats the old discount. For others it doesn’t.
Will you spend time overseas before selling? If yes, the expat testing period may matter more than the headline reform.
None of this is a “sort it out later” issue. The rules that determine your outcome are running from 1 July 2027, and the gains being protected are the ones you’ve already built.
Next Step
Whether this reform costs you or barely touches you comes down to your specific timeline, holding period, and residency history. That’s a calculation, not a guess. Our team models it against your actual position and shows you the number before you make any decision.
Frequently Asked Questions
Is the 50% CGT discount gone completely?
For assets sold from 1 July 2027, yes — it’s replaced by an inflation-based indexation method for residents. New-build investors are the exception: they can still choose the old 50% discount if it gives a better result.
Does this apply to gains I've already made?
No. Gains accrued before 1 July 2027 are grandfathered under the current rules. Only growth after that date is subject to the new system. Property held across the boundary requires a split calculation.
I'm a non-resident. How does this affect me?
More than the headline suggests. On top of the general reform, a separate testing period can permanently block indexation for any property you hold while spending time overseas. See our full breakdown of the indexation testing period.
Does this change the main residence exemption?
No. The main residence exemption and the six-year absence rule are unchanged by this reform.
Compliance Disclaimer: This article is general information only and does not constitute financial, tax, or legal advice. It reflects the tax reform legislation as passed; details may be subject to amendment before 1 July 2027. Your individual circumstances will determine your tax position. Consult a qualified Australian expat tax advisor before making decisions based on this content.
