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Run a 30-second check on what the proposed CGT discount cut could mean for your numbers — before the Federal Budget on 12 May 2026.
General information only — not personal tax advice. Decisions about buying, selling, or restructuring investment property should be made with your accountant.
The Federal Budget on 12 May 2026 is widely expected to address the 50% CGT discount that has applied to investment property since 1999. Three reform options have surfaced in published commentary and inquiry testimony: cutting the discount to 33%, 30%, or 25%. None of these is a “new 35% CGT rate” — the change is to the discount, not the headline rate.
Grant Thornton published a client alert walking through the three options and the after-tax impact across marginal brackets. Hudson Financial Partners cites Treasury modelling considering each level. The Senate Economics References Committee has heard testimony on revenue impact and design.
For an investor on the top marginal rate (47% including Medicare), the effective tax on a capital gain currently sits around 23.5% under the 50% discount. Under a 25% discount it would rise to about 35%. The percentage- point change is largest at the top brackets.
Nothing is law yet. Reform options have specific named figures and a hard date — but the Budget could legislate any of the three, none of them, or something else entirely. The page below walks through what each outcome means for an existing investor and a prospective buyer.
Grandfathering is the single provision that determines whether the announcement is a minor recalibration or a major strategic shift. Every reasonable analysis — Grant Thornton, Hudson, Senate testimony — expects reform to grandfather existing property purchases by attaching the discount rate to the property at purchase date.
Under that design, an investor who bought in 2018 keeps the 50% discount on that property forever, even if they sell it in 2035 after a future cut. The discount rate is a property-level provision, not a sale-time provision. This is why the “sell before vs sell after” framing seen elsewhere in the press is mostly a category error for existing owners — under the proposed design, the discount you receive is fixed by purchase date, not sale date.
If grandfathering happens (the most likely outcome), here’s what changes for existing investors: nothing about the rate they pay on a property they already own. What changes is the appetite for buying a new investment property after the commencement date — and the strategic value of the property they already hold.
Three worked examples generated from the calculator's engine. Each card compares the CGT under the existing 50% discount with the most aggressive proposed scenario (25% discount) and surfaces the dollar difference.
Property bought for $700,000, now worth $900,000. Held by individual on the 39% marginal bracket (37% + Medicare).
Tax under current 50% discount
$39,000
Tax under proposed 25% discount
$58,500
Extra tax under proposed change
+$19,500
Property bought for $900,000, now worth $1,300,000. Held by couple on the 47% (45% top) marginal bracket.
Tax under current 50% discount
$94,000
Tax under proposed 25% discount
$141,000
Extra tax under proposed change
+$47,000
Property bought for $800,000, now worth $1,100,000. Held in a discretionary trust with distribution at the 39% bracket.
Tax under current 50% discount
$58,500
Tax under proposed 25% discount
$87,750
Extra tax under proposed change
+$29,250
Most existing investors are not panic-selling. Under the proposed grandfathering design, an existing property keeps its 50% discount whether the owner sells next month, in 2030, or in 2040. Selling now to “lock in” the rate solves a problem that does not exist. Investors who have other reasons to sell — exiting the market, life-stage shifts, a specific underperforming asset — are continuing those decisions on their original timetable.
Refinancing instead of selling is the conversation that's come up most often in Danny's recent client work. An investor who's built equity in an investment property over 10+ years often has more options through refinancing — releasing equity to fund another purchase, restructuring loan splits to better match income — than through selling and triggering the gain. The proposed reforms make this conversation more pointed, not less.
Prospective buyers with finance already in train are running the timing math. For someone who was already planning to buy this calendar year, the difference between locking in 50% on a long-term hold versus taking whatever rate is legislated post-Budget is meaningful — the calculator above projects it. For someone who wasn’t planning to buy, none of the above moves the case enough to overcome deposit, serviceability, or lender considerations.
Ownership-structure review is on the table for investors with multiple properties or complex family arrangements. Whether the next purchase should sit in an individual name, a trust, or an SMSF affects both the discount available on a future gain and the serviceability assessment a lender will run today. SMSFs already receive a 33.3% discount and are not affected by the proposed reform; companies receive no discount either way.
Stress-testing cashflow under reduced concessions makes sense for any investor with a leveraged portfolio. If the after-tax return on a held investment property tightens materially, the loan structure that worked at the old rate may need adjustment.
Danny isn't a tax adviser. CGT calculations, ownership structures, and trust-distribution mechanics are an accountant's domain. Danny is the person who arranges the loan structure that makes any of these strategies executable.
Refinancing instead of selling — releasing equity to fund a new purchase, restructuring loan splits to align income and deductions — is the work Danny does most often with established investors. It avoids triggering the gain and keeps the existing 50% discount attached to the property.
Pre-approval timeline for buying before the deadline — getting finance fully in train so a contract can sign by 12 May 2026 if the rest of the file allows. Danny works across an 80+ lender panel; for an investor whose paperwork is in order, a pre-approval can be in place inside two weeks.
Lender introductions for trust restructuring — when an accountant has decided that the next purchase should sit in a trust or SMSF, lender appetite varies materially across the panel. Danny knows which lenders look favourably on the structure and which are policy-unfriendly.
Direct answers to the questions Danny hears most often. General information only — nothing here is personal credit or tax advice.
Almost certainly not in terms of the CGT discount rate. Every reasonable analysis of the proposed reform — Grant Thornton, Hudson Financial Partners, the Senate inquiry testimony — expects existing properties to be grandfathered, meaning the 50% CGT discount stays attached to the property for the life of that asset, regardless of when it's eventually sold. The proposal cuts the discount only for new purchases made on or after the commencement date.
The three reform options under serious discussion are 33%, 30%, and 25%. Treasury modelling cited by Hudson Financial Partners considered all three. The number that lands depends on revenue targets and political negotiation. The framing of "a new 35% CGT rate" sometimes seen in commentary is wrong — the change is to the discount, not the headline rate. For a top-bracket investor, an effective tax of about 23.5% on a capital gain today (under the 50% discount) would rise to about 35% under a 25% discount.
Nothing has been legislated. The Federal Budget is on 12 May 2026; an announcement on Budget night, if it happens, would set a commencement date. Historically tax changes affecting CGT have been announced for "from the announcement date" (instant effect) or for a future date (typically 1 July of the following financial year). The latter is more common when the change is significant. There is no certainty either way.
Probably not — the proposed reform design grandfathers existing properties, so selling before the Budget changes nothing about the discount rate you'd pay. If grandfathering happens as expected, the discount you receive is determined at purchase, not sale. Selling now is a market-timing decision, not a tax-rate decision. There are scenarios where existing investors choose to sell anyway — exiting the market for unrelated reasons, realising gains while market conditions are strong, or hedging against the small risk that grandfathering design shifts during legislation — but that's a different conversation. Talk to your accountant.
If you were already planning to buy this calendar year and your finance is in order, the timing question is genuine — for a new buyer, the discount rate that attaches to the property is determined at purchase. Locking in 50% on a long-term hold could mean tens of thousands less CGT compared to buying after a reform that drops it to 25%. But buying a property you weren't going to buy anyway, just to beat a date, almost never makes financial sense. Deposit, serviceability, and lender choice matter more than a possible 17 percentage points of discount on a gain you won't realise for 10 years.
For a top-bracket investor with a $400,000 capital gain, the existing 50% discount produces about $94,000 of CGT. Under a 25% discount the same gain would produce about $141,000 — a $47,000 difference. For a mid-bracket investor with a $200,000 gain, the difference between 50% and 25% is about $19,500. The calculator on this page shows your numbers across all four scenarios. The percentage difference is largest for top-bracket holders.
No. The main-residence exemption is a separate provision from the CGT discount. The current 50% discount and any proposed change to it apply to investment properties — assets held for income or capital growth — not to a primary place of residence (subject to the usual six-year-absence and partial-use rules).
Trusts that hold investment property generally pass the gain through to beneficiaries, who claim the discount at their marginal rate — the proposed reform would change the rate available to those beneficiaries on properties bought after commencement. SMSFs already receive a 33.3% discount and are not expected to be affected by the reform. Companies receive no CGT discount and are also unaffected. The calculator on this page handles each structure's logic. Get accountant input on which entity should hold a new purchase.
Then the calculator on this page becomes a general CGT planning tool under the existing 50% rule, the urgency framing falls away, and the strategic question for investors stays where it was — market timing and ownership structure rather than rate-driven.
Negative gearing and the CGT discount are linked but separate provisions. Some commentary pairs them together because both affect the after-tax return on investment property. The current proposed reform under discussion is to the CGT discount specifically. If a future Budget addressed negative gearing as well, the calculator on this page would not capture that — negative gearing affects ongoing rental losses against income, not the eventual CGT on sale.
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