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Capital Gains Tax Calculator on Sale of Property 2025-26

Calculate how much capital gains tax you'll pay when selling an Australian investment property. Includes the 50% CGT discount, cost base adjustments, depreciation clawback, and full marginal tax rate analysis.

Property Details
Gross Capital Gain
$200,000
Taxable Capital Gain
$68,500
Estimated CGT Payable
$21,825
50% Discount
Eligible (6 years)
Effective CGT Rate
10.9%
of gross gain
Net Capital Gain
$137,000
after cost base
Step-by-Step CGT Calculation
Income Tax Impact of Property Sale

How the capital gain stacks on top of your regular income and pushes through tax brackets.

Tax Bracket Visualisation
CGT by Holding Period

How your CGT changes depending on when you sell. The 50% discount applies after 12 months of ownership.

Sale Year Holding 50% Discount Taxable Gain CGT Payable Effective Rate
Strategies to Legally Minimise CGT
  • 📅
    Hold for more than 12 months
    The 50% CGT discount is one of the most powerful tax concessions available to Australian property investors. Selling even one day before the 12-month anniversary means you pay tax on the full capital gain instead of half.
  • 📋
    Maximise your cost base
    Keep records of every legitimate cost: stamp duty, conveyancing, building inspections, capital improvements, loan establishment fees, and selling costs. A higher cost base means a lower taxable gain. Renovation receipts from years ago could save you thousands.
  • 📈
    Time the sale to a low-income year
    Since CGT is added to your regular income, selling in a year when your other income is lower (e.g. career break, parental leave, transition to part-time) can result in significantly less tax. The difference between a 30% and 45% bracket on a $100K gain is $15,000.
  • 💲
    Offset gains with capital losses
    Capital losses from shares, crypto, or other investments can be offset against your property capital gain. If you have unrealised losses elsewhere in your portfolio, consider crystallising them in the same financial year as the property sale.
  • 👥
    Consider ownership structure
    If you purchased jointly with a spouse, each person reports their share of the gain separately. This can keep each person in a lower tax bracket. Future purchases may benefit from being structured via a trust or other entity, depending on your circumstances.
  • 📆
    Settlement date matters, not contract date
    The CGT event occurs on the date of the contract, not settlement. If you sign a contract on 28 June, the gain falls in the current financial year even if settlement is in August. Plan the contract signing date strategically around the end of financial year.

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How Is Capital Gains Tax Calculated on Property in Australia?

When you sell an Australian investment property for more than you paid, the profit is a capital gain and the ATO requires you to pay capital gains tax (CGT) on it. However, CGT is not a separate tax. It is added to your regular taxable income and taxed at your marginal tax rate. This is why understanding your tax brackets is essential when estimating CGT on the sale of rental property.

The calculation starts with your cost base: the original purchase price plus all acquisition costs (stamp duty, legal fees, inspections), any capital improvements made during ownership (renovations, extensions, structural work), and selling costs (agent commissions, marketing, legal fees for the sale). The difference between your sale proceeds and your cost base is your net capital gain.

How is capital gains tax calculated on property in Australia?

Capital gains tax on property is calculated by subtracting your cost base (purchase price plus purchase costs, capital improvements, and selling costs) from your sale proceeds. If you've claimed depreciation, that amount is added back. If held for more than 12 months, you apply the 50% CGT discount. The resulting taxable capital gain is added to your other income and taxed at your marginal tax rate.

What is the 50% CGT discount for investment property?

Australian resident individuals who hold an investment property for more than 12 months before selling are entitled to a 50% discount on their capital gain. This means only half of the net capital gain is added to your taxable income. The discount does not apply to companies, and different rules apply to trusts and super funds.

What costs can you include in the cost base for CGT?

The cost base includes: the original purchase price, stamp duty, conveyancing and legal fees, building and pest inspection costs, capital improvements (renovations, extensions, structural repairs), and selling costs such as agent commissions, marketing fees, and legal costs associated with the sale.

Does depreciation affect capital gains tax on property?

Yes. If you've claimed depreciation deductions (Division 40 plant and equipment) on your investment property, the ATO requires you to add back (clawback) those amounts to your capital gain when you sell. This effectively increases your taxable capital gain by the total depreciation you've claimed over the ownership period.

Division 43 (building allowance) depreciation is generally not subject to clawback for properties purchased after May 1997. For more information on how tax deductions interact with investment property, see our guide on negative gearing changes in 2026.

How does CGT work with marginal tax rates?

Your taxable capital gain is added on top of your regular taxable income. This means the gain may push you into a higher tax bracket. For example, if your salary is $100,000 and you have a $60,000 taxable capital gain, the combined $160,000 is taxed at progressive rates, meaning different portions of the gain may be taxed at 30%, 37%, or even 45%.

Can I reduce capital gains tax on an investment property?

Yes, there are several legal strategies: hold the property for more than 12 months to access the 50% discount, keep thorough records of all purchase costs and capital improvements to maximise your cost base, time the sale to a financial year where your other income is lower, offset capital gains against capital losses from other investments, and consider the timing of settlement relative to the end of the financial year.

Capital Gains Tax on Investment Property in Australia

Capital gains tax (CGT) is the tax you pay on the profit when you sell an investment property. It is not a separate tax. The capital gain is added to your taxable income in the year you sell, and the additional tax is paid at your marginal rate. The CGT calculator runs through the full mechanics, including the 50 percent discount for properties held over 12 months, depreciation clawback, cost base adjustments, and the impact on your tax bracket.

For most Australian investors selling a property held in their personal name for more than 12 months, the effective rate ends up between 11 and 23.5 percent of the gain. At the top marginal bracket (47 percent including Medicare levy), the discount cuts the effective rate to 23.5 percent. Lower brackets land lower. Properties sold inside 12 months get no discount and are taxed at the full marginal rate.

How CGT Is Calculated

The formula sounds simple but the inputs decide the answer. The capital gain is the sale price minus the cost base. The cost base is the original purchase price plus stamp duty, legal fees, buyers agent fees, building and pest inspections, capital improvements (renovations that add to the building), and selling costs (agent commission, advertising, legal).

Two adjustments matter most. Depreciation claimed during ownership reduces the cost base by the same amount, which means it gets clawed back through CGT. And capital improvements (kitchen renovation, granny flat, structural extension) raise the cost base. Repairs and maintenance do not, those were already deducted as ongoing expenses.

For SMSFs, the rules differ. SMSF property held over 12 months gets a one-third discount instead of 50 percent, with effective CGT rates of 10 percent in accumulation and 0 percent in pension phase. See our SMSF property investment guide for the full mechanics.

When to Sell and When to Hold

CGT timing matters more than most investors realise. Selling in a year your other income is lower (career break, parental leave, retirement) can drop your marginal rate from 47 percent to 30 percent, halving the tax bill on the gain. Splitting a sale across two financial years can spread the gain across two tax brackets. Offsetting capital gains against capital losses from other investments (shares, crypto) is allowed.

The default play for long-term investors is "buy and hold." Every year you hold, the property grows tax-free until you sell. Selling triggers the tax. Refinancing to extract equity does not. Most experienced portfolio builders refinance against equity rather than selling, precisely to defer or avoid CGT.

Common Mistakes With CGT

Forgetting the depreciation clawback. Investors who claimed strong annual depreciation deductions are surprised when the clawback inflates their taxable gain. The benefit during ownership is real, but it gets partially repaid at sale.

Missing capital improvements in the cost base. Receipts for renovations from years ago are easy to lose, and every $10,000 of capital improvements not in the cost base costs you $2,350 in CGT at the top bracket. Keep records.

Not pairing the calculator with the negative gearing calculator and growth projection calculator. The full picture across hold and sale is what tells you whether the investment was worth it.

Related Tools and Resources

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