Capital Gains Tax on Property and Shares: A Practical Guide (2025–26)

Updated for the 2025–26 income year, with 2026–27 changes noted. Reviewed 19 October 2026.

Capital gains tax (CGT) isn't a separate tax. A net capital gain is added to your taxable income and taxed at your marginal rate. This guide covers how to work out a gain on property and shares, the 50% discount, the main residence exemption, capital losses, and the changes from 1 July 2027.

Step by step

• Work out the capital proceeds: usually the sale price.
• Work out the cost base: purchase price plus incidental costs of buying and selling (stamp duty, legal fees, agent commission, brokerage), capital improvements, and certain non-deductible holding costs. Capital works deductions you claimed reduce the cost base.
• Subtract to get the gain or loss for each asset.
• Apply capital losses (current year first, then prior-year losses carried forward).
• Apply the 50% discount to remaining gains on assets held at least 12 months (for resident individuals and trusts).

Timing

For property, the CGT event usually happens on the contract date, not settlement. For shares, it's the trade date. The 12 months for the discount runs from acquisition to that date.

Property

• Your main residence is generally exempt. A partial exemption may apply if it was rented out or used to run a business.
• If you move out and rent your former home, you can generally keep treating it as your main residence for up to 6 years at a time (if you don't treat another property as your main residence).
• Investment properties are fully subject to CGT, less the discount if eligible.
• Foreign residents have different rules, including generally no main residence exemption.

Shares and ETFs

• Each purchase is a separate parcel with its own cost base and date.
• Dividend reinvestment plan shares are new parcels acquired on the allotment date.
• If you can identify which parcel you sold, you can use that parcel's cost base. Keep records to show it.
• Brokerage is part of the cost base or reduces proceeds, not a deduction.
• Corporate actions (splits, demergers, takeovers) can change cost bases. Keep the company's notices.

Capital losses

Capital losses can only reduce capital gains, never your salary. Unused net capital losses carry forward indefinitely. Losses must be applied before the discount.

Changes from 1 July 2027

For individuals, trusts and partnerships, the 50% discount is replaced by cost base indexation and a 30% minimum tax on gains, for gains accruing after 1 July 2027. Gains accrued before that date keep the discount, and new builds can choose either regime. If you hold assets across that date, a valuation at 1 July 2027 may become important.

Worked example

Example (illustrative figures only – not real client data): Sophie sold shares in March 2026 that she bought in 2021, and also had a $2,000 capital loss carried forward from a previous year.

Her net capital gain of $2,800 is added to her 2025–26 taxable income.

Checklist

• Collect purchase and sale contracts, settlement statements and broker confirmations.
• List capital improvements with receipts.
• Check prior-year capital losses on your notice of assessment.
• Confirm contract dates for the 12-month test.

Common mistakes to avoid

• Using settlement date instead of contract date.
• Forgetting to reduce the cost base by capital works claimed.
• Applying the discount before losses.
• Missing DRP parcels.

Record-keeping tips

• Keep records until 5 years after the CGT event (longer if you carry losses forward).
• Keep a share register or use portfolio software that tracks parcels.

When to see an accountant

Get personal advice from a registered tax agent if:

• you're selling a former home that was rented out;
• you hold assets that will straddle 1 July 2027;
• you're a foreign resident or moving overseas;
• you have an ABN, side business or rental property as well as your job;
• you have received an ATO letter, review or amended assessment.

Related guides

• Negative gearing
• Crypto tax
• Investment income deductions
• all deduction guides

ATO sources for this guide

• ATO: Calculating your CGT
• ATO: Property and capital gains tax
• ATO: Your main residence (home)
• ATO: Shares and similar investments
• ATO: Using capital losses to reduce capital gains
• ATO: Reforming negative gearing and capital gains tax
• Budget 2026-27: Negative gearing and CGT tax explainer
• ATO: Copyright notice

This guide is written in our own words. It draws on information published by the Australian Taxation Office, and some short phrases are quoted with attribution. Source material: © Australian Taxation Office for the Commonwealth of Australia. Top Accountants is not endorsed by, or affiliated with, the ATO.