Simulate 50% CGT Discount vs. Cost Base Indexation
Analyze how the historic 1 July 2027 CGT reforms affect your investment property. Calculate transitional split-treatment, 30% floor top-up tax, and indexation savings.
Renovations are indexed compoundingly under the new rules.
Plus 2% Medicare levy is modeled.
Purchase Date
2024-07-01
1 July 2027
Est. Val: $714,524
Projected Sale
2029-07-01
If reform is rejected & standard rules stay
Taxable Gain
$150,000
CGT Payable
$45,000
If asset is acquired after 1 July 2027
Taxable Gain
$196,487
CGT Payable
$58,946
Your exact projected CGT impact
Taxable Gain
$249,193
CGT Payable
$74,758
1 July 2027 Valuation Recommended
By selecting the Valuation Method and locking in an estimated 1 July 2027 value of $714,524, you safeguard your pre-2027 gains under the 50% discount rules. Make sure you book a registered property surveyor to document this on 1 July 2027.
CPI Indexation Power
Because capital improvements are compound-adjusted for inflation, your $50,000 of renovations grows into an indexed cost base offset of **$$758,069**, saving you thousands in extra tax!
Instantly save these purchase & projected sale figures as a property. We'll track your compound inflation-indexed cost base and store all receipts securely!
Under the 2027 CGT reforms, keeping flawless receipts of your pre-reform and post-reform cost bases is the **single most effective way** to lower your final tax bill.
No credit card required • Secure AWS bank-grade encryption
Announced in the May 2026 Federal Budget, the Australian Government is introducing the most significant reform to Capital Gains Tax (CGT) in over 40 years. Effective 1 July 2027, the traditional 50% CGT discount is being abolished for individuals, trusts, and partnerships on assets held for more than 12 months.
To replace the discount, the government is introducing an inflation-indexed cost base system known as Cost Base Indexation. Additionally, a new 30% Minimum Tax Floor will apply to net capital gains, ensuring high-value gains are taxed at a base level regardless of the seller's other taxable income.
Under the new indexed system, you do not get a flat 50% discount. Instead, your original cost base (purchase price, buying costs, legal fees, and renovations) is compound-adjusted for inflation using the Consumer Price Index (CPI) from your purchase date to your sale date.
If an asset experiences **moderate capital growth** in a **high inflation** environment, indexing the cost base significantly reduces the "taxable profit" because a large portion of the gains is eaten by inflation. You are only taxed on "real" gains.
If a property experiences **hyper-growth** (e.g., doubling in value in a short period) in a **low inflation** environment, the 50% discount remains far more beneficial. Indexation only increases your cost base by a tiny percentage, leaving massive taxable profits.
If you purchased your property **before 1 July 2027** and sell it **after 1 July 2027**, you will qualify for transitional "Split Treatment" to protect your pre-reform gains:
To determine the split, you can choose between two ATO-approved methods:
A professional valuation of the property is obtained as of **1 July 2027**. The legacy gain is locked in based on this valuation. Future post-reform growth is calculated from this valuation cost base.
The final capital gain is apportioned mathematically based on the exact number of days the property was owned before vs. after 1 July 2027. No valuation is required, but it assumes linear growth.
Prior to these reforms, assets purchased before 20 September 1985 were entirely exempt from CGT. Under the new 2027 rules, **pre-CGT assets lose their full exemption**.
While any growth prior to 1 July 2027 remains completely exempt, any capital growth that occurs **after 1 July 2027** will be subject to the new CGT rules (Indexation + 30% floor). A formal market valuation on 1 July 2027 is **mandatory** for these properties to establish their starting cost base.
With the 50% discount eliminated, the only way to lower your tax liability is to increase your indexed cost base. Because **capital improvements are also indexed for inflation**, every dollar you spend on renovations and hold in records actually increases in value over time.
Example: If you spend $50,000 on a kitchen renovation, after 10 years of 3% inflation, that renovation adds $67,195 to your indexed cost base instead of just $50,000—saving you thousands in extra tax!
Use ReceiptClaimer to build a permanent, digital repository for your property purchase documents, renovation invoices, and transaction receipts, ensuring you claim every eligible dollar when you sell.