The 1 July 2027 CGT Reset: What It Means for Your Investment Property

On 1 July 2027 the 50% capital gains discount ends for individuals and trusts. If you own an investment property, something happens to it that day whether you do anything or not, and most people have only heard the bad half of it.

This is part one of two. Part two covers the business side of the same reset. This one is about property: what the reset does, what number goes in the box, whether you need a valuation, your own home, and the six year rule almost everyone gets wrong.

Prefer to listen? We covered this in The Line in the Sand: Your Property and the 1 July 2027 Reset, episode 62 of the Aevum Accounting Podcast.

What changes on 1 July 2027

The discount goes to zero. From 1 July 2027, the 50% CGT discount ends for individuals and trusts, except on genuine new builds and affordable housing. In its place your cost base is indexed for inflation, and if you are an Australian resident you pay at least 30% tax on the new growth, unless that year you receive a payment such as the Age Pension or JobSeeker. This is law, not a proposal: the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received assent on 26 June 2026. We covered the wider package in our Budget explainer and the negative gearing changes that came with it.

The reset: a sale that never happens

The growth you already have keeps the old rules. On 30 June 2027 you are treated as having sold almost every asset you hold, and on 1 July as having bought it back at its market value just before 1 July. Nothing changes hands and nothing is payable. Growth up to the line keeps the 50% discount; growth after it goes through indexation and the minimum tax. You pay on both slices only when you sell or otherwise dispose of the asset, there is nothing to report in your 2026-27 return, and the deemed sale is ignored for the 12-month rule. One exception matters in Perth: if you have been a foreign or temporary resident for tax at any time since May 2012 while you owned the asset, the reset as passed does not apply to you.

What number goes in the box?

Market value is the only option today. The default is the property's market value just before 1 July 2027. The Act also lets the government set a formula by legislative instrument, and Treasury released a draft in August, with consultation closing on 21 August. At the time of writing it has not been registered, so nobody can use it yet. The draft takes your purchase price, your eventual sale price and how long you held the property, works out a daily growth rate and compounds it forward to 2027. That suits a property that grew steadily. It can miss for one that sat flat and then jumped, or one you renovated. You choose between the two in the return for the year you sell, by the time you lodge it.

Do you need a valuation on 1 July 2027?

No, and there is no deadline. The law does not set one, and the explanatory memorandum never uses the word valuation. The date being valued is fixed, but the report can be written later: retrospective valuations are ordinary, and the ATO's own valuation guidance uses one as an example. The catch is hindsight, because value is judged on the market at the valuation date, not on what happened afterwards. Waiting costs you evidence, not eligibility. If yours is a property the formula would get wrong, capture the evidence while it is fresh: photographs, renovation invoices, and what was selling in your street that winter.

What about your own home?

Your home stays exempt. Treasury's Budget material says the main residence will continue to be exempt, and the main residence rules themselves have not been touched. The Act does not carve your home out of the deemed sale, but it clearly assumes the exemption keeps working on both sides of the line. If your home is fully exempt, it stays fully exempt. If part of your ownership period was not exempt, the days it was your home still come out of the taxable part. What nobody has published yet is exactly how a partly exempt home is split across the reset.

The six year rule is not six years of free rental

It only works on a home you lived in first. The section opens: if a dwelling that was your main residence ceases to be your main residence. Live in it, move out and rent it, and you can keep treating it as your main residence for up to six years, as long as you do not treat another home as your main residence over the same period, apart from up to six months when moving. Leave it empty and there is no time limit, and a fresh six years runs each time you move back in and out. Never lived in it, and the rule never switches on. If you are a foreign resident for tax when you sign the sale contract, you generally lose the exemption altogether. Our investment property guide covers the rest of the basics.

Rented it first? Those days count against you

The gain is apportioned by days. On sale, the whole gain is multiplied by the days the property was not your main residence, over the days you owned it. That means every day it was not your home, not only rented days, so an empty year before you moved in usually counts too, unless the delay was illness or something unforeseen, or you were building or renovating. In the ATO's example, Farnaz rented out a property for 757 days, then lived in it for more than four years before selling: $173,097 of her $538,500 gain was taxable, and $86,548 went into her return after the discount. Do it the other way round, home first then rental, and a second rule resets your cost base to market value when you first rent it out. It is compulsory, needs a valuation at that date, and restarts the 12-month discount clock.

If you would like someone to look at your property and tell you whether the formula will do it justice, book a consultation with our team. Our tax accountants in Perth can go through your dates before you make any plans. If you are already a client with a rental, bring it to your next catch-up.

The information in this article is general in nature and does not take into account your personal circumstances. It does not constitute specific tax or financial advice. Everyone's situation is different, so we recommend speaking with a qualified professional at Aevum Accounting before acting on anything you have read here.