Investor is deciding whether to sell a property they have held for 8 years. The agent says they can get $1.1 million. Before they sign the listing agreement, they need to know what the ATO will take and what they will actually pocket.
Capital Gains Tax Calculator
Tax
Stamp duty, legal, inspection
Renovations, extensions added to cost base
50% CGT discount: If you've owned the property for more than 12 months, only 50% of the capital gain is added to your taxable income.
Main residence exemption: Your primary home is generally exempt from CGT entirely. This calculator is for investment properties.
Cost base includes purchase price + stamp duty + legal fees + capital improvements.
Main residence exemption: Your primary home is generally exempt from CGT entirely. This calculator is for investment properties.
Cost base includes purchase price + stamp duty + legal fees + capital improvements.
Reference: ATO — Capital Gains Tax
Results are estimates for planning purposes. Verify with current standards and a qualified professional.
1 What this calculator does
Calculates Australian Capital Gains Tax (CGT) on the sale of an investment property. Applies the 50% CGT discount for assets held over 12 months. Calculates net proceeds after CGT and the effective tax rate on the gross capital gain.
2 Formula & professional reasoning
Cost base = Purchase price + Acquisition costs + Capital improvements
Capital gain = Sale price - Cost base
For assets held > 12 months (AU): Taxable gain = Capital gain x 50%
CGT payable = Taxable gain x Marginal tax rate
Net proceeds = Sale price - CGT payable
The 50% CGT discount for assets held more than 12 months is one of the most significant tax advantages in Australian property investment. It effectively halves the tax on the capital gain. The remaining 50% of the gain is added to other income and taxed at the investor's marginal rate. The cost base includes the original purchase price, stamp duty, conveyancing costs, building inspection fees and any capital improvements (renovations, additions) -- not repairs and maintenance, which are deducted in the year incurred.
3 Worked examples
⚠️ Illustrative example only — not clinical or professional instruction.
Basic
8-year hold -- 50% CGT discount
Given: Purchase price: $520,000 | Sale price: $1,100,000 | Acquisition costs: $25,000 | Capital improvements: $45,000 | Held: over 12 months | Marginal tax rate: 37%
Working:
Cost base: $520,000 + $25,000 + $45,000 = $590,000 | Capital gain: $1,100,000 - $590,000 = $510,000 | Taxable gain (50% discount): $255,000 | CGT: $255,000 x 0.37 = $94,350 | Effective rate on full gain: $94,350 / $510,000 = 18.5%Answer: CGT payable: $94,350 | Net proceeds: $1,005,650 | Effective CGT rate: 18.5%
💡 The 50% discount reduces the effective rate from the 37% marginal rate to 18.5% on the gross gain. The $25,000 in acquisition costs and $45,000 in improvements saved $25,900 in CGT.
Standard
Short hold -- no discount
Given: Purchase price: $680,000 | Sale price: $750,000 | Acquisition costs: $30,000 | Held: 9 months | Marginal tax rate: 37%
Working:
Cost base: $710,000 | Capital gain: $40,000 | No 50% discount (held under 12 months) | CGT: $40,000 x 0.37 = $14,800Answer: CGT: $14,800 | Effective rate: 37%
💡 Short-term holds pay CGT at the full marginal rate with no discount. The difference between a 9-month and 13-month hold on this property is $7,400 in tax. Timing of settlement matters significantly.
Advanced
Large gain -- tax timing strategy
Given: Purchase price: $400,000 | Sale price: $1,200,000 | Gain: $800,000 | 50% discount: taxable gain $400,000 | Marginal rate: 47% (over $180K income)
Working:
If sold in June: $400,000 + salary $200,000 = $600,000 total taxable income | All at 47% | If sold in July: $400,000 taxable gain recognised in a new year separately from salary -- potentially lower effective rate on part of the gainAnswer: June sale: CGT approx $188,000 | July sale timing or income reduction strategy could reduce rate by 5-10%
💡 With a large gain, tax timing (income year), income splitting and superannuation contributions can significantly reduce the effective CGT rate. Always consult a tax professional for gains above $200,000.
4 Sanity check
CGT discount eligibility (Australia)
Held >12 months by an individual or trust: 50% discount applies | Company: no discount | Super fund: 33.3% discount
The 50% discount is one of the most valuable tax concessions in Australia.
What is included in the cost base
Purchase price + Stamp duty + Conveyancing + Building inspection + Capital improvements (renovations, extensions, new items)
Do NOT include repairs and maintenance -- these are deducted annually, not added to cost base.
Principal place of residence exemption
Main residence is CGT exempt | Investment properties do not qualify | Partial exemption if property was ever your home
Agent commission on sale
Agent commission is a selling cost that reduces your proceeds -- add it to the cost base or reduce the sale price in the calculation
5 Common errors
| Error | Cause | Consequence | Fix |
|---|---|---|---|
| Not including stamp duty and acquisition costs in the cost base | Only using purchase price in the cost base calculation | Capital gain overstated -- CGT is higher than it should be | The cost base includes purchase price, stamp duty, conveyancing fees, building inspection fees and all costs directly associated with acquiring the property. |
| Including repair and maintenance costs in the cost base | Confusing capital improvements with repairs and maintenance | ATO may adjust the cost base on audit -- potential penalties | Only capital improvements (adding new features, extending the property, structural upgrades) go into the cost base. Routine repairs and maintenance are claimed as expenses in the year incurred. |
| Not timing the settlement date strategically | Accepting a settlement date without considering the tax year | A late June settlement adds a large CGT gain to the same tax year as salary -- potentially pushing income into the next tax bracket | Where possible, settle after 1 July to push the CGT gain into the next tax year. This gives an additional 12 months before the tax is due and allows for income management. |
| Forgetting agent commission in the proceeds calculation | Using the gross sale price without deducting selling costs | CGT slightly overstated -- agent commission (2-2.5%) is a deductible selling cost | Add agent commission and conveyancing on the sale to the cost base (or reduce sale proceeds) for a more accurate CGT calculation. |
6 Reference & regulatory links
7 Professional workflow
Common tools used alongside this one:
Property Investment ROI
Property Investment ROI shows total return; CGT Calculator shows what the ATO takes from that return when you sell
→
Negative Gearing Calculator
Years of negative gearing deductions are effectively 'paid back' as a higher gain on sale -- CGT is the balancing mechanism
→
Land Tax Estimator
Land Tax Calculator shows the annual holding cost; CGT shows the tax at exit -- together they complete the investment tax picture
→