Since the 2026–27 Budget, capital gains tax on an investment property depends on two things: when you bought it, and, for properties bought after the Budget, whether it's a new build or an existing home. Most investors reading this fall into one group: Bucket A.
The three buckets, at a glance
| Bucket | When you bought | What applies |
|---|---|---|
| A - Bought before the Budget | On or before 12 May 2026 | Choice: certified valuation, or the ATO's default method |
| B - New build, after the Budget | After 12 May 2026, never lived in | 50% discount on the whole gain, or indexation instead |
| C - Existing home, after the Budget | After 12 May 2026, second-hand | Indexation only; no second option |
This guide focuses on Bucket A; most properties in Australia sit here today.
Bucket A in detail
Buy on or before 12 May 2026, and part of your gain still gets the 50% discount. There's one date that decides how much: 1 July 2027 (also written 1 July 2027, same moment).
- Gain earned before that date: keeps the old 50% discount.
- Gain earned after that date: uses indexation instead; your cost base grows with inflation, rather than getting a flat discount.
Your choice: certified valuation, or the ATO's default
Bucket A gives you a genuine choice between two ways of splitting your gain:
- Option A: a certified valuation
A registered valuer certifies what your property was worth on 1 July 2027. That figure becomes the real dividing line between the two eras.
- Option B: the ATO's default method
Without a valuation, the tax office splits your gain by time instead, assuming your property grew at a steady, even rate the whole way through. It's automatic, but it can't see what your property actually did.
Skipping the valuation doesn't avoid this decision; it just makes it for you. See how much that can cost in some cases, and which method actually wins in others; it genuinely depends on your numbers.
A simple example
| Purchase price | $500,000 (1 July 2018) |
|---|---|
| Certified valuation | $1,100,000 (1 July 2027) |
| Sale price | $1,400,000 (1 July 2033) |
| Tax rate used | 45% (top marginal rate) |
| CPI assumption | 4% per year |
| Step | With the certified valuation | Without it (ATO default) |
|---|---|---|
| Gain before 1 July 2027 | $1,100,000 - $500,000 = $600,000 | ≈ $540,000 (a rough 9/15 time split) |
| Taxable amount (50% discount applies) | $300,000 | $269,967 |
| Cost base adjusted for inflation over 6 years | $1,100,000 → $1,391,926 | $1,039,934* → $1,315,919 |
| Taxable amount left over after that adjustment | $8,074 | $84,081 |
| Total taxable gain | $308,074 | $354,048 |
| Tax owed at 45% | $138,633 | $159,322 |
Result: the certified valuation saves $20,688 in this example. The size and direction of that gap depends on your own numbers, full breakdown in our worked examples above.
Do's and Don'ts
| DO | DON'T |
|---|---|
| Get a certified valuation dated "as at" 1 July 2027, desktop or In-Person, from a registered valuer. | Assume the 50% discount still covers your whole gain after 1 July 2027. |
| Keep that valuation with your original purchase contract; it's now a permanent record. | Confuse the valuation date with the date the valuer visits; it must value the property as it stood on 1 July 2027. |
| Compare both methods once you have a valuation, and use whichever is lower. | Assume a valuation is your only option once you have one; the ATO's default is always still available. |
| Track any renovation costs separately, with their own start date. | Combine a renovation's cost with the main valuation split; they're worked out separately. |
Key dates to remember
| 12 May 2026 | Budget announcement: decides which bucket you're in |
|---|---|
| 1 July 2027 | The CGT split date: decides your tax calculation |
Full explanation: why this date matters so much
Where to go next
- Do I need a valuation for the 2027 CGT changes?
- You could lose tens of thousands in tax if you skip the valuation
- Certified valuation vs ATO's default formula: which one actually wins?
- What does "certified valuation" actually mean?
This article is general information only and doesn't consider your personal circumstances. Speak with a registered tax agent or accountant about your own situation.
