Capital Gains Tax Calculator

Capital gains tax is not a separate tax with its own rate. Instead, when you sell an investment property for more than it cost you, the profit (your "capital gain") is added to your assessable income for that financial year and taxed at your marginal tax rate. If you earn $90,000 from your job and make a $50,000 capital gain on a property sale, you are taxed as though you earned $140,000 that year (before any discount is applied).

The capital gain is calculated as the difference between your sale price and your cost base. The cost base is not simply what you paid for the property. It includes the purchase price plus a range of associated costs like stamp duty, legal fees, and capital improvements you made during ownership. We will cover cost base adjustments in detail further down the page.

One important detail: the ATO treats the sale as occurring on the date contracts are exchanged, not the settlement date. If you exchange contracts on 28 June and settle on 15 August, the gain falls into the financial year ending 30 June, not the one starting 1 July. This matters if you are timing a sale around the end of the financial year to manage your tax position.

CGT applies to any property that is not your main residence. Investment properties, holiday houses, and vacant land you sell at a profit all trigger a CGT event. If you have been living in a property and then rented it out before selling, the six-year absence rule may reduce or eliminate your CGT liability, but only if you meet certain conditions.

Because the gain is taxed at your marginal rate, the actual percentage you pay depends on your total income for the year. Someone on a $45,000 salary will pay a lower effective rate on the same capital gain than someone earning $180,000. This is why some investors time their sale for a year when their other income is lower. If you are approaching retirement or taking a career break, that can be the year to sell.

If you hold an investment property for more than 12 months before selling, you are entitled to a 50% CGT discount. This means only half of your capital gain is added to your assessable income. It is the single biggest concession available to property investors, and it can cut your tax bill on a property sale roughly in half.

The 12-month period is measured from the date you signed the contract to purchase the property to the date you sign the contract to sell it. Both dates are contract dates, not settlement dates. If you bought on 15 March 2023 and sell on 16 March 2024, you have held for more than 12 months and qualify for the discount. Sell one day earlier, and you do not.

The discount is available to individual investors and trusts (which can pass the discount through to individual beneficiaries). It is not available to companies. If your investment property is held in a company structure, the company pays tax on the full capital gain at the corporate tax rate. This is one of the reasons most individual property investors hold properties in their own name or through a family trust rather than a company.

Here is how the discount works in practice. Say you sell a property and, after subtracting your cost base from the sale price, your capital gain is $120,000. If you held the property for more than 12 months, you apply the 50% discount, and only $60,000 is added to your taxable income. At a marginal rate of 37%, the tax on $60,000 is $22,200 instead of $44,400 on the full amount. That is a $22,200 saving just for holding the property long enough.

This discount is a key reason property is treated differently from other investments in practice, even though the tax rules apply broadly to all capital assets. Understanding it is critical when you are planning a sale or calculating whether a negatively geared property has been worth holding over the long term.

Your cost base is everything it legitimately cost you to buy, hold (in a capital sense), and sell the property. The higher your cost base, the lower your capital gain, and the less tax you pay. Getting this right is one of the most important parts of managing a property sale, and it rewards landlords who have kept good records throughout their ownership.

Items you can include in your cost base:

• Purchase price: The amount you paid for the property.
• Stamp duty: The transfer duty you paid when you bought the property.
• Legal and conveyancing fees: Solicitor costs at purchase and at sale.
• Building and pest inspections: Pre-purchase inspection costs.
• Loan establishment fees: Mortgage application and valuation fees at the time of purchase (though note that borrowing expenses you have already claimed as deductions over the loan period cannot be double-counted).
• Capital improvements: Renovations and upgrades that enhanced the property, such as a new kitchen, bathroom renovation, or adding a deck. These must be genuine improvements, not repairs.
• Selling costs: Agent commissions, advertising, legal fees, and auctioneer costs when you sell.

Items you cannot include:

• Repairs and maintenance: If you claimed a repair as an immediate deduction on your tax return, it cannot also be added to your cost base. Replacing a broken tap is a repair. Installing a whole new bathroom is an improvement.
• Expenses already claimed as deductions: Mortgage interest, insurance, council rates, and other costs you have deducted against rental income are not part of the cost base. They have already reduced your tax in the years you claimed them.
• Depreciation already claimed: If you have claimed depreciation on plant and equipment or capital works, those amounts reduce your cost base. The ATO effectively claws back the benefit when you sell.

This is why keeping detailed records of every capital improvement over the life of your ownership matters. A kitchen renovation you did eight years ago could reduce your CGT bill by thousands, but only if you can prove what you spent.

The six-year absence rule is one of the most valuable CGT provisions for property owners who transition from living in their home to renting it out. Under this rule, if you move out of your main residence and start earning rental income from it, you can continue to treat the property as your main residence for CGT purposes for up to six years. If you sell within that window, no capital gains tax applies to the growth during the absence period.

The conditions are simple in principle but carry some important details:

• The property must have genuinely been your main residence before you moved out. You cannot use this rule on a property that was always an investment.
• You must not treat any other property as your main residence during the absence period. If you buy a new home and claim the main residence exemption on that, you lose the exemption on the property you moved out of.
• The six-year clock resets if you move back in. If you move out for three years, move back in for a year, and then move out again, a new six-year period starts from the second departure.
• There is no limit to how many times you can use the rule, as long as you meet the conditions each time.

If you rent the property out for longer than six years without moving back in, the exemption does not vanish entirely. Instead, you get a partial exemption based on the proportion of time the property was your main residence versus the total ownership period. This calculation can get complicated, and it is worth getting professional advice if you are in this situation.

One thing to be aware of: the six-year absence rule only applies to capital gains tax. It does not exempt you from land tax. Once you move out and start renting the property, it becomes taxable land for land tax purposes in most states, regardless of the CGT treatment. And you still need to declare the rental income on your tax return and can claim the usual deductions against that income during the rental period.

Let's work through a real-world example to see how all these pieces fit together.

You bought an investment property in Melbourne in July 2018 for $620,000. At purchase, you paid $32,000 in stamp duty, $2,500 in legal fees, and $800 for building and pest inspections. Your total purchase cost base starts at $655,300.

During ownership, you renovated the kitchen for $18,000 and added a new deck for $12,000. Both are capital improvements that add to your cost base. You also claimed $14,000 in depreciation deductions over the years (a combination of Division 40 plant and equipment and Division 43 capital works). Claimed depreciation reduces your cost base.

Updated cost base: $655,300 + $18,000 + $12,000 - $14,000 = $671,300.

In March 2026, you sell the property for $880,000. Your selling costs include $17,600 in agent commission (2%), $1,800 in legal fees, and $2,200 in advertising. Selling costs are added to the cost base.

Final cost base: $671,300 + $17,600 + $1,800 + $2,200 = $692,900.

Your gross capital gain is: $880,000 - $692,900 = $187,100.

You held the property for more than 12 months, so the 50% CGT discount applies. Your taxable capital gain is: $187,100 x 50% = $93,550.

This $93,550 is added to your other assessable income for the financial year. If your salary is $95,000, your total taxable income becomes $188,550. The additional tax on the capital gain portion depends on the marginal rates that apply across those higher brackets.

Without the 50% discount, you would have been taxed on the full $187,100. That discount saved you tax on $93,550 worth of income, which at a 37% marginal rate is roughly $34,600 in tax savings.

The lesson here is that every dollar you can legitimately add to your cost base, from stamp duty to the deck you built five years ago, directly reduces your CGT bill. This is why tracking capital expenses over the full life of your ownership is so important. If you are using propkt to manage your properties, those records are already there when you need them. For a complete walkthrough of CGT rules, read our full guide to capital gains tax on investment property.