The 1 July 2027 CGT Change Is Now Law: What It Means, City by City

The speculation phase is over. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026 and is now in force: from 1 July 2027, the 50% CGT discount for individuals, trusts and partnerships is replaced by cost base indexation, with a minimum 30% tax applied as a floor on the marginal-rate calculation. This article sets out what the final Act says, what changed on the way through Parliament, and — using the same Cotality data as our long-run price history — how much accrued gain a typical owner in each capital city now has riding on the 1 July 2027 boundary.

What is the 1 July 2027 CGT apportionment?

The 1 July 2027 CGT apportionment is the transitional mechanism in Australia’s legislated CGT reform under which a capital gain on an asset acquired before 1 July 2027 and sold afterwards is divided into two portions: the gain that accrued up to 1 July 2027, which keeps the existing 50% discount treatment, and the gain that accrues after that date, which is taxed under the new rules (cost base indexation plus the 30% minimum). The market value of the asset at the boundary date determines where one regime ends and the other begins — which is why that value matters more than any other number in the reform.

The reform is now law: key dates

From Royal Assent to commencement is a 12-month runway. That is the window owners have to get their records — including evidence of value at the boundary — in order.

What the final Act says

The Act retains several carve-outs from the Budget announcement:

• Income support recipients — people receiving means-tested income support payments (such as the Age Pension or JobSeeker) are exempt from the 30% minimum tax for any financial year in which they receive a payment.
• New builds — investors in eligible new residential builds (genuine new supply) can choose to keep the 50% discount instead of moving to indexation.
• Affordable housing — the 60% CGT discount for qualifying affordable housing is fully retained.
• Small business — the existing small business CGT concessions are retained.

What changed between the announcement and the Act

Three points in the legislated package go beyond the May 2026 Budget factsheet, and they matter for property owners:

1. Pre-CGT assets are now explicitly in. The second reading speech confirms the new regime applies to all CGT assets held over 12 months by individuals, partnerships and trusts — including pre-1985 assets — for gains accruing from 1 July 2027. A family holding since 1983 that was entirely outside the CGT net now has a taxable clock starting at the boundary date.
2. The exclusion list was formalised. Superannuation funds (including SMSFs), companies, life insurance companies and foreign or temporary residents are dealt with expressly rather than by high-level statement. Our earlier analysis of why SMSF property is insulated from the reform is confirmed by the final text.
3. The apportionment mechanics are delegated. The Act sets the principle — old treatment for gains accrued to 1 July 2027, new treatment after — but the detailed computation method is left to a legislative instrument that has not yet been released. Professional bodies’ submissions on the Bill refer to a planned apportionment method instrument and note that asset holders will need to establish market value at the boundary date. The ATO has not yet published practical guidance on acceptable evidence.

That third point is the operative one for anyone holding property today, and we return to it below.

Accrued gains by capital city: what is riding on the boundary

The apportionment protects gains accrued before 1 July 2027 — but only if you can show what the asset was worth at the boundary. To size what is at stake, the table below takes Cotality’s median house value in each capital (28 February 2026) and its published five-year change in dwelling values, and works backwards to the implied purchase price of a median house bought five years earlier. The difference is the indicative accrued gain a typical five-year owner is carrying into the new regime.

Indicative only: five-year changes are for dwelling values (houses and units) applied here to median house values, and individual properties diverge widely from city medians. See Methodology.

The ordering is the story. The post-pandemic boom cities — Brisbane, Perth and Adelaide — have roughly $440,000 to $540,000 of accrued gain sitting on a typical five-year hold. Under the transitional rules, the portion of that gain accrued by 1 July 2027 keeps its 50% discount treatment provided the boundary value is established. Melbourne, at the other end with about $103,000 of five-year gain, has less locked in — but also the most future gain likely to fall under the new, less generous regime if its cycle turns.

Owners in Perth, Brisbane and Adelaide, in other words, have the most to lose from an under-evidenced boundary value; owners in Melbourne and Hobart have the most of their eventual gain still to come under indexation rules.

The valuation question

Treasury’s Budget factsheet contemplated two ways to apportion: obtain a valuation of the asset as at the boundary, or use a specified apportionment formula. The Act leaves the detailed method to a legislative instrument that is still to come, and the ATO’s evidence expectations are not yet published.

What can be said today, without overstating it:

• There is no published legal requirement that every owner obtain a professional valuation at 1 July 2027.
• A time-based formula, if that is what the instrument prescribes as the default, apportions the gain by holding period — regardless of when the growth actually happened. For a Brisbane owner whose property grew 86% in the five years to 2026 and may grow more slowly after 2027, a straight-line assumption can shift real pre-boundary gain into the higher-taxed post-boundary portion. We worked through these mechanics in where the apportionment formula leaves investors exposed.
• A contemporaneous market valuation at the boundary date is the most defensible way to support apportionment — it fixes the number with evidence from the time, rather than reconstructing it years later when the property is eventually sold.

For pre-CGT holdings the same logic applies with more force: the boundary value is effectively the starting point for the first CGT exposure the asset has ever had.

Worked example: the Treasury’s own numbers

Treasury’s factsheet includes a worked example that maps exactly onto the transitional mechanics (and onto our CGT calculator):

• Investment property purchased 1 July 2022 for $800,000; sold 1 July 2032 for $1,600,000
• Market value at 1 July 2027: $1,131,371
• Pre-boundary portion: ($1,131,371 − $800,000) × 50% discount = $165,685 taxable
• Post-boundary portion: ($1,600,000 − $1,131,371) less indexation = $319,958 taxable
• Total taxable gain: $485,643 — at a 47% marginal rate, roughly $228,000 of tax, against about $188,000 if the old rules had applied to the whole gain

Every dollar the boundary value moves shifts gain between the discounted and non-discounted portions. That is the entire significance of 1 July 2027 in one line.

What to do before 1 July 2027

1. List every CGT asset held on 30 June 2027 — investment properties, holiday homes, pre-1985 holdings, commercial premises. The reform touches all of them for post-boundary gains.
2. Fix the cost base records now — purchase contracts, capital improvements, holding costs. Apportionment arguments start from the cost base.
3. Plan boundary-date evidence — decide, asset by asset, whether to rely on whatever default method the coming instrument prescribes or to obtain a contemporaneous valuation around the boundary date.
4. Watch for the instrument and ATO guidance — the detailed method and evidence rules are still to be published; we will update this article as they land.
5. Don’t rush disposals on tax grounds alone — gains accrued to 1 July 2027 keep their treatment under the transitional rules; the reform is not, by itself, a reason to sell before the date.

Methodology

• Legislative facts: Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (No. 49, 2026), Federal Register of Legislation — status “In force”, Royal Assent 26 June 2026; bill progress via the Parliament of Australia bill tracker; reform parameters per the Treasury Budget 2026-27 factsheet as enacted, and the ATO’s new legislation page.
• City figures: Cotality Home Value Index, 28 February 2026 release — median house values and published five-year dwelling-value changes. The “implied Feb 2021 value” divides the Feb 2026 median by (1 + five-year change); it applies a dwellings growth rate to a houses median, so treat gains as indicative magnitudes, not property-level estimates. Figures rounded to the nearest $1,000.
• Worked example: Treasury factsheet, page 7; figures as published.
• The apportionment method instrument had not been released at the time of writing; statements about it are drawn from the Act, the second reading speech and professional bodies’ published submissions on the Bill.

Frequently asked questions

Is the July 2027 CGT reform now law?

Yes. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026 (Act No. 49 of 2026) and the new rules commence on 1 July 2027. The detailed apportionment method and ATO practical guidance are still to be published.

Do I have to sell before 1 July 2027 to keep the 50% discount?

No. Under the transitional rules, the portion of a gain accrued up to 1 July 2027 keeps the existing discount treatment even if you sell years later. What determines that portion is the apportionment method — and the evidence you hold of the property’s value at the boundary date.

Do SMSFs lose the CGT discount under the new law?

No. Superannuation funds, including SMSFs, are excluded from the reform entirely — the final Act formalises this. Fund CGT treatment is unchanged, as we set out in our analysis of the SMSF exclusion.

Is a market valuation at 1 July 2027 compulsory?

No published rule makes it compulsory. Treasury’s factsheet contemplated either a valuation or a specified formula, and the Act delegates the detail to a legislative instrument not yet released. A contemporaneous valuation is the most defensible way to evidence the boundary value, particularly where a property’s growth has not been even over time.

Which capital cities are most affected?

On indicative five-year accrued gains, Brisbane (~$544,000), Perth (~$490,000) and Adelaide (~$436,000) owners have the most pre-boundary gain to protect. Melbourne (~$103,000) and Hobart (~$158,000) owners have less accrued but face the new regime on more of their eventual gain.

What happens to pre-1985 (pre-CGT) properties?

Gains accrued before 1 July 2027 remain exempt under transitional rules, but gains accruing after that date are brought into the CGT regime for individuals, partnerships and trusts — the first CGT exposure these assets have ever had, which makes the boundary-date value decisive.

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Sources:

• Treasury Laws Amendment (Tax Reform No. 1) Act 2026 — Federal Register of Legislation (C2026A00049)
• Treasury, “Negative Gearing and Capital Gains Tax Reform” factsheet, Budget 2026-27 (PDF)
• ATO — Tax reform: Boosting home ownership, reforming negative gearing and capital gains tax
• Cotality Home Value Index, February 2026 release

This article is general information, not tax advice — apportionment outcomes depend on individual circumstances and on subordinate legislation still to be released. Last verified 6 July 2026. We update this article as the apportionment instrument and ATO guidance are published.

See also: Capital Gains Tax Valuations · CGT Calculator · Preparing for the 1 July 2027 valuation · Where the apportionment formula leaves investors exposed · Australian House Prices 1980–2026 · Australian Property Valuation Statistics 2026