Capital Gains Tax on Property Australia (2025–26)

Selling an investment property, holiday house or inherited property in Australia will usually trigger a capital gains tax (CGT) event. The amount you owe depends on the sale price, your total cost base, how long you held the property, and your marginal tax rate.

This guide covers the CGT rules specific to property, including cost base elements, the main residence exemption, the 6-year absence rule and inherited property.

Calculate now: Use the Capital Gains Tax Calculator to estimate CGT on your property sale.

How CGT on property is calculated

The basic calculation is:

Step	Description
1	Capital proceeds (sale price minus selling costs)
2	Minus total cost base (purchase price + stamp duty + legal fees + improvements − capital works claimed)
3	Equals gross capital gain
4	Minus capital losses (current-year + carried-forward)
5	Apply 50% CGT discount (if held 12+ months, individual)
6	Net capital gain added to taxable income

Property cost base — what's included

For property, the cost base typically includes:

Buying costs (incidental to acquisition)

Purchase price (contract price or market value)
Stamp duty (transfer duty) paid at purchase
Conveyancing and legal fees at purchase
Building and pest inspection fees
Mortgage establishment fees (some elements)

Capital improvements

Renovations — kitchen, bathroom, extensions
Structural improvements — new garage, pool, deck
Landscaping that adds permanent value

Selling costs (reduce capital proceeds or add to cost base)

Real estate agent commission
Marketing and advertising costs
Conveyancing and legal fees at sale
Auctioneer fees

What reduces the cost base

Capital works deductions (Division 43) you have claimed on tax returns — this is the most commonly missed adjustment
Depreciation on the building itself that you have deducted

Cost base details: See the full CGT Cost Base Explained guide for all five elements.

Worked example — investment property

Item	Amount
Sale price	$850,000
Purchase price	$600,000
Stamp duty at purchase	$22,000
Legal fees (buy + sell)	$4,000
Renovations	$20,000
Agent commission	$17,000
Capital works claimed	$8,000
Total cost base	$638,000
Capital gain	$195,000
50% discount (held 5 years)	−$97,500
Net capital gain	$97,500

This $97,500 is added to other taxable income and taxed at the individual's marginal rate.

Try your numbers: Enter your details in the Capital Gains Tax Calculator to see the breakdown and estimated tax.

Main residence exemption

Your family home is generally exempt from CGT provided:

You lived in it as your main residence for the entire ownership period
You did not use it to produce income (e.g. renting out rooms)
You are an Australian resident for tax purposes
The land is not more than 2 hectares

If all conditions are met, you pay no CGT when you sell.

Partial exemption

A partial exemption may apply if:

You rented the property for part of the ownership period
You used part of it for business or income-producing purposes
The land exceeds 2 hectares

The exempt portion is calculated based on the ratio of exempt days to total ownership days.

The 6-year absence rule

If you move out of your main residence and rent it out, you can still claim the main residence exemption for up to 6 years — provided you do not nominate another property as your main residence during that time.

Key rules:

The 6-year period resets each time you move back in (even briefly)
You can only have one main residence at a time
If absent for more than 6 years, a partial exemption applies
This rule does not apply to properties that were never your main residence

Note: The 6-year rule is highly fact-specific. This calculator does not fully model partial exemptions — consult a tax agent for complex scenarios.

CGT on inherited property

When you inherit a property, you generally do not pay CGT at that time. CGT applies when you sell the inherited property.

Cost base rules for inherited property

When deceased acquired it	Your cost base
Before 20 September 1985	Market value at date of death
After 20 September 1985	Deceased's original cost base

12-month rule for inherited property

If the deceased held the property for 12+ months, you are treated as having held it for 12+ months — regardless of how quickly you sell. The 50% CGT discount is available.

Main residence exemption on inherited property

If the deceased used it as their main residence and it was not income-producing:

You have 2 years from the date of death to sell it CGT-free
After 2 years, a partial exemption may apply

Capital Gains Tax Calculator Australia — complete CGT overview
CGT Cost Base Explained — the 5 elements, what reduces it
CGT Discount & Indexation Methods — 50% discount vs indexation comparison
Stamp Duty Calculator — stamp duty is part of your property cost base
Capital Gains Tax on Shares — if you also have share investments

Important: This guide is general information only and does not constitute tax advice. Property CGT rules vary by circumstance. Consider consulting a registered tax agent for your situation.

Capital Gains Tax on Property