CGT Planning After the 2026 Budget: Property vs Shares
Author: Tepuy Solutions | Published: July 2025 | Updated: August 2, 2026
Category: Investment Taxation, Financial Planning
Overview
This article examines the capital gains tax (CGT) implications under Australian tax law when disposing of long-held investment property versus shareholdings. We explore the structural, timing, and ownership flexibility of each asset class, including strategic tax planning options, parcel sales, ownership restructuring, and the use of trusts. The analysis aims to inform long-term investors about optimal exit strategies that balance return maximisation with tax efficiency.
1. Introduction
Investment properties and shares are two of the most common assets held by Australian investors. While both are subject to CGT, the taxation mechanics, flexibility, and planning strategies differ significantly. The nuances of ownership structures, holding periods, partial disposals, and ability to manage taxable events shape the after-tax outcomes of each investment.
2. Capital Gains Tax Basics in Australia
- Capital gains are added to your assessable income in the year of the asset's disposal.
- Companies do not receive a CGT discount, under either the old or new regime.
- CGT applies to the difference between the asset's cost base and its sale proceeds, minus applicable costs (e.g., legal, stamp duty, brokerage, agent fees).
2.1 The old regime (assets purchased before 12 May 2026)
Under the rules that have applied for the past two decades, individuals and trusts receive a flat 50% CGT discount if the asset is held for more than 12 months before disposal. This still applies in full to assets purchased before 12 May 2026, and to gains accrued before 1 July 2027 on assets held across that date.
2.2 The new regime (assets purchased after 12 May 2026, gains from 1 July 2027)
The 2026-27 Federal Budget replaces the 50% discount with a different mechanism for gains accruing from 1 July 2027 on assets purchased after 12 May 2026:
- CPI cost-base indexation replaces the flat 50% discount — the asset's cost base is adjusted upward for inflation (CPI) over the holding period, reducing the taxable gain to its real (inflation-adjusted) value rather than an automatic half.
- A 30% minimum tax applies to the real (indexed) gain — regardless of the investor's marginal rate, at least 30% of the real gain is paid as tax.
- Who's affected: individuals, trusts, and partnerships.
- Superannuation funds are not affected — the existing super CGT treatment (15% in accumulation phase, 0% in pension phase) continues unchanged.
- New builds are the one exception for property: a new-build purchase can choose whichever method — the old 50% discount or the new indexation-plus-minimum-tax method — produces the better outcome.
For an asset held across the 1 July 2027 commencement date, the gain is split: the portion accrued up to 30 June 2027 gets the old 50% discount, and the portion accrued from 1 July 2027 onward is taxed under the new indexation-plus-minimum-tax method.
3. Selling Investment Property: Tax Implications
3.1 Full vs Partial Disposal
Investment property must typically be sold in full. Partial sales are not practically viable unless the land title is subdivided, which involves council approvals, significant costs, time delays, and capital gains events on each subdivided title. Thus, investors cannot "sell part of a house" to realise a partial gain for tax smoothing.
3.2 One-Off CGT Event
Property sales create a single, large CGT event. This can push the investor into the top marginal tax bracket in the year of sale. For example, under the old 50% discount (still applicable to property purchased before 12 May 2026), an individual realising a $400,000 gain would add $200,000 to their income, taxed at rates up to 45% plus Medicare levy. For property purchased after 12 May 2026, the taxable amount instead depends on CPI indexation and the 30% minimum tax on the real gain (see Section 2.2) — the arithmetic is different and generally results in a higher taxable amount for gains with low inflation-adjusted growth.
3.3 Ownership Transfers Midway: ATO Risks
Changing ownership mid-way (e.g., transferring a share to a spouse on a lower tax bracket) triggers a CGT event at the time of transfer, based on market value. No "rollover relief" exists for personal investment properties (unless under family law / divorce / death). Therefore, transferring 50% of a property to a spouse after many years does not reset ownership and may result in an immediate capital gain. Some investors use family discretionary trusts or tenants-in-common arrangements early on to split ownership and manage future tax. However, retrospective restructuring is generally ineffective or costly.
3.4 Deductions and Depreciation Recapture
Capital works and depreciation claimed over the years reduce the cost base, thus increasing the capital gain. The more depreciation claimed, the higher the gain upon sale. This makes long-term property holding slightly more tax-inefficient than it appears.
4. Selling Shares: Tax Implications
4.1 Parcel-Based Flexibility
Shares can be sold in portions (known as "parcels"), offering significant tax planning flexibility. This allows CGT gains to be spread over multiple financial years, disposal of lowest-gain or highest-cost-base parcels to reduce tax, and tactical realisation of losses to offset gains (loss harvesting). Most brokers use FIFO (first-in-first-out) by default, but the ATO allows specific identification of parcels if proper records are maintained.
4.2 CGT Discounts and Structures
The same regime split described in Section 2 applies to shares: individuals holding shares bought before 12 May 2026 still receive the 50% CGT discount after 12 months; shares bought after that date are taxed under CPI indexation plus the 30% minimum tax on gains accruing from 1 July 2027. Shares held by companies pay full corporate tax (no CGT discount, under either regime). Trusts can distribute capital gains and allow streaming to lower-income beneficiaries. SMSFs in accumulation phase pay 15% CGT, and 0% in pension phase (a major advantage, unaffected by the 2026-27 reform).
4.3 Ownership Flexibility
Unlike property, shares can be easily transferred between parties or entities at market value. Transfers trigger CGT events, but can be used strategically: selling to a family trust early in the holding period, holding in superannuation for concessional CGT treatment, or structuring to allow income splitting. Moreover, shares can be gifted, inherited, or transferred more easily without disrupting the asset itself.
5. Strategic Comparison Table
The CGT discount row below now depends on when the asset was purchased — everything else in the table is unaffected by the 2026-27 reform.
| Feature | Property (pre-Budget purchase) | Property (purchased after 12 May 2026) | Shares (pre-Budget purchase) | Shares (purchased after 12 May 2026) |
|---|---|---|---|---|
| CGT Discount | 50% after 12 months | CPI indexation + 30% minimum tax (new builds can choose either) | 50% after 12 months | CPI indexation + 30% minimum tax |
| Negative Gearing | Losses offset salary | Losses quarantined to rental income (from 1 Jul 2027) — new builds exempt, retain salary offset | Losses quarantined (n/a to shares) | Losses quarantined (unchanged) |
| Partial Disposal | Not feasible (unless subdivided) | Easy, parcel-by-parcel | ||
| Year-by-Year Control | None – one-time event | Yes – multi-year disposal flexibility | ||
| Ownership Change Flexibility | Costly, triggers CGT | Easier to restructure | ||
| Holding in Trusts | Requires careful planning from start | Easier to structure | ||
| Use of Super | Not practical | Common and tax-effective | ||
| Upfront/Exit Costs | High (stamp duty, agent, legal, etc.) | Low (brokerage only) | ||
| Cost Base Reductions | Yes (via depreciation) | Minimal | ||
| CGT Planning Options | Limited | Extensive (e.g. parcel selection, timing) | ||
6. Key Tax Planning Takeaways
- Selling property is rigid: a one-time, high-impact CGT event with limited flexibility.
- Selling shares offers timing, parcel, and ownership structure strategies that can reduce tax.
- Long-term property investors must plan the ownership structure from day one (e.g., joint ownership, trusts) to gain tax efficiency.
- Share investors have more post-facto planning tools.
- If you're holding property or shares purchased before 12 May 2026 — the old 50% discount still applies to you. The timing of a future sale relative to the 1 July 2027 commencement date matters if you're holding across that line.
- If you're buying a new build — you can choose the 50% discount or CPI indexation, whichever produces the better outcome for your holding period and expected inflation. Model both scenarios before committing.
- If you're buying an established property after 12 May 2026 — plan your exit around CPI indexation plus the 30% minimum tax, not the old 50% discount assumption.
- Super remains the most tax-efficient vehicle for capital gains — 15% CGT in accumulation phase, 0% in pension phase. Unaffected by this reform.
7. Final Notes and Recommendations
For investors considering exiting long-held investments:
- Use multiple-year planning if possible—especially for property sales, coordinating with income years of lower taxable income.
- Model the after-tax proceeds, not just headline gains.
- Consider the implications of trust distributions, loan balances, and depreciation clawback.
- Consult with a tax professional before making structural changes.
Disclaimer
This article reflects Australian tax law as at August 2026, including changes announced in the 2026-27 Federal Budget (Acts No. 49 and 50 of 2026). CGT and negative gearing reforms are now law. This is general information only — not financial or tax advice. Seek independent advice.