From 1 July 2027, the 50% CGT discount will be replaced with an inflation-indexed cost base and a 30% minimum tax on real gains, under reforms a new JLL whitepaper says will reshape property investment tax.
The changes are already law, passed by parliament in June, with residential properties bought before 12 May retaining grandfathered negative gearing entitlements.
JLL's modelling puts the stakes in concrete terms. Take a Sydney investment property bought for $800,000 in 2020, worth roughly $1.2 million by mid-2027, and sold in 2032 for $1.8 million.
With a professional valuation locking in the $1.2 million baseline, the eventual tax bill comes to approximately $208,680. Relying on the Australian Taxation Office's default formula instead pushes that figure to $266,960 — a difference of $58,280 "paid simply because they didn't spend $500 on a professional valuation."
That gap exists because any property held before 1 July 2027 and sold afterwards will have its capital gain split into two phases: growth up to that date retains the existing 50% discount, while everything built up afterwards falls under the new indexation and minimum tax regime.
This makes the property's value on 1 July 2027 the critical reference point, and investors have two ways to establish it: commission an independent valuation, or default to the ATO's straight-line growth formula, which assumes even appreciation over the entire holding period regardless of how the market actually moved.
The reform also intersects with other changes already in train. A 30% minimum tax on discretionary trusts takes effect from 1 July 2028, adding a further layer for property held in family trust structures, though testamentary trusts are excluded from that measure. Pre-1985 properties, previously exempt from CGT altogether, will also become taxable on growth from 1 July 2027 onward, making a valuation at that date essential given there is no original purchase price to reference.
Selling before the deadline offers no advantage, the whitepaper notes, since gains built up to 1 July 2027 are already protected under the transitional rules regardless of when the property is eventually sold.
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