Some investors are asking whether they should sell shares or property before 1 July 2027 to "lock in" the 50% capital gains tax discount before it disappears. The law, however, already protects the discount on growth accrued before that date through a deemed sale and reacquisition.

What the law already does for assets you hold

The CGT overhaul is law. Schedule 1 of the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which received Royal Assent on 26 June 2026, replaces the 50% discount with cost-base indexation and a 30% minimum tax for individuals, trusts and partnerships.

But the ATO is clear that the reforms "will only apply to gains that accrue after 1 July 2027".

The mechanism is a transition rule. Assets held on 1 July 2027 are deemed to be sold and reacquired at market value just before that date. The resulting gain is not taxed then; it is deferred until the asset is actually sold.

The Budget tax explainer puts it plainly: "The 50 per cent CGT discount will apply to the difference between the asset's cost base and its value at 1 July 2027." Indexation and the minimum tax apply only to gains from that date.

Why a pre-deadline sale may add little

If growth up to mid-2027 keeps the 50% discount whether you sell or not, a sale before the deadline does not give that growth better treatment. The discounted gain is the same either way.

What a sale does change is timing. A capital gain is generally counted in the income year of the CGT event, which for a sale is usually when the contract is signed. Selling in 2026–27 means paying tax on the gain sooner, rather than deferring it until a later sale.

It also means giving up any future growth. That later growth would have been taxed under the new system, but it is growth the seller no longer owns.

Nor does the new system automatically mean a heavier bill on that later growth. Indexation removes the inflationary part of a gain, and the 30% minimum tax is a floor rather than a flat rate. For someone already on a 37% or 45% marginal rate, the floor has no effect.

Some retirees may also be outside the minimum tax altogether. Under the Act, people who receive a listed income support payment, such as the Age Pension, at any time in the financial year a gain is realised are exempt from it.

Hypothetical example: a unit bought in 2015

This is a simplified, hypothetical illustration. It ignores selling costs, cost-base adjustments and the Medicare levy, and assumes inflation of 2.5% a year.

Sam bought an established investment unit in 2015 for $600,000. It is worth $900,000 on 1 July 2027.

If Sam sells in June 2027 for $900,000, the $300,000 gain is discounted by 50%, leaving $150,000 taxable.

If Sam instead holds on and sells in July 2032 for $1.1 million, the first $300,000 of growth still attracts the 50% discount, again leaving $150,000 taxable, but that tax is not due until the 2032–33 year.

For the post-2027 growth, the deemed $900,000 cost base is indexed. After five years at 2.5% inflation it is about $1,018,000, leaving a real gain of roughly $82,000, taxed at Sam's marginal rate or 30%, whichever is higher.

Under the old rules, that $200,000 of later growth would have produced $100,000 of taxable gain. In this hypothetical, the new system actually taxes less of it, although lower inflation or faster price growth could reverse that result. Under the Act, indexation is only available where the asset has been held for at least 12 months, which Sam comfortably meets.

The costs that may outweigh any benefit

For property investors, the biggest consideration may be negative gearing.

Selling a grandfathered property and buying another established dwelling would mean losing that status. From 1 July 2027, net rental losses on the replacement would be quarantined against residential property income and gains, unless it is a qualifying new build.

That can matter for years. A grandfathered property keeps the ability to offset losses against wages and other income for as long as it is held.

There are also the usual frictions of selling and buying, such as agent fees, legal costs and state stamp duty on any replacement purchase. None of those are recovered by the timing of a CGT event.

For shareholders, the calculation may be simpler, but brokerage and time out of the market can still matter, depending on individual circumstances.

Valuation or apportionment: the choice that may matter more

For many investors, the more consequential decision may be how the 1 July 2027 value is worked out. The Act allows either a market valuation or an apportioning method to be set by legislative instrument.

Treasury's tranche 2 exposure draft, which closed for comment on 21 August 2026, includes an apportionment method as an alternative to a valuation. It is not yet law.

Investors who expect to rely on a valuation may want to discuss with a registered tax agent or adviser what evidence would support the figure.

Who might still sell, and what to watch

There can be legitimate reasons to sell before July 2027 that have nothing to do with the discount, such as needing cash, reducing debt or rebalancing a portfolio. Those decisions depend on individual circumstances, and general information like this is no substitute for personal advice.

What to watch between now and the start date:

  • the registration of the apportioning instrument and its formula
  • the Tax Reform No. 3 Bill, which the NTAA expects before the end of 2026
  • ATO guidance on market valuations at 1 July 2027
  • any changes to how rental losses interact with the minimum tax

The key date remains 1 July 2027. Until then, the existing 50% discount applies to all eligible gains in the usual way.