Should I Sell Before July 2027? The CGT Timing Decision for Australian Investors

From 1 July 2027, Australia's 50% capital gains tax discount is being replaced by cost base indexation — and every investor with unrealised gains is asking the same question: should I sell before the deadline?

The short answer is: it depends entirely on your marginal rate, how long you've held the asset, and how much it's likely to grow after July 2027. For some investors, selling before July 2027 is clearly the right call. For others, selling early would be an expensive mistake.

This guide walks through the decision framework, the maths, and the one thing most investors get wrong about the transition rules.

Run the numbers yourself: Use our CGT Comparison Calculator to model your specific investment — property, ETF, or shares — under both scenarios before making any decision.

What's actually changing from 1 July 2027

The current rules: if you've held an asset for more than 12 months, only 50% of your nominal capital gain is included in your taxable income. You pay CGT at your marginal rate on that half.

The proposed new rules from 1 July 2027:

The 50% discount is gone
Instead, your cost base is indexed by CPI (inflation) — only the real, inflation-adjusted gain is taxable
A 30% minimum tax rate applies — even if your marginal rate is below 30%, you pay at least 30% on the gain
The change applies to shares, ETFs, investment property, cryptocurrency, and managed funds
Main residence, superannuation funds, and small business CGT concessions are unaffected

The thing most investors get wrong

Before working through the maths, there is one widespread misconception worth addressing directly.

You are not forced to sell before July 2027 to preserve your tax position.

The transitional rules mean that gains accrued before 1 July 2027 on assets you already hold are still eligible for the 50% CGT discount — even if you sell in 2028, 2030, or 2035. The transition splits your gain into two portions:

Pre-July 2027 gain → 50% discount applies (taxed at your marginal rate on half the gain)
Post-July 2027 gain → indexation applies (taxed at max of your marginal rate or 30%)

This split is calculated using either a formal market valuation at 1 July 2027, or an ATO time-apportionment formula. Either way, the gain you've already built up is not suddenly subject to the new rules just because you hold past the deadline.

This changes the decision considerably. You're not choosing between "sell before July 2027 and keep the discount" vs "hold and lose the discount entirely." You're choosing between:

Sell before July 2027: 100% of current gain taxed under old rules
Hold past July 2027: Pre-July 2027 gain taxed under old rules; only future gains taxed under new rules

The case for selling before July 2027

1. Simplicity and certainty

Selling before July 2027 means no transition complexity. No valuation required. No ATO formula to apply. The entire gain — from purchase to sale — gets the 50% discount. If you were going to sell anyway in the next 12–18 months, there's a clear argument to bring forward the sale and avoid the administrative overhead of a transition split.

2. High marginal rate + large nominal gain

The 50% discount is most valuable to high-income earners. At a 47% marginal rate, the current effective CGT rate on a long-held asset is 23.5% (47% × 50%). Under the new rules, even with indexation, you'd likely pay 47% on a significant portion of the real gain (since Australian assets have mostly grown well above CPI). Selling early at 23.5% effective rate is hard to beat.

3. The asset is unlikely to grow much after July 2027

If you're holding an asset that has strong unrealised gains but modest future growth prospects, the post-July 2027 portion of the gain will be small. In that case, the value of holding is limited and the simplicity of selling under current rules is worth considering.

4. You're in or near retirement and can control your income

A retiree with a modest income in the year of sale can manage their total taxable income carefully. Selling before July 2027 while your total income is low may result in a very low effective CGT rate — well below what the 30% minimum floor would impose under the new rules.

The case for holding past July 2027

1. You lose compounding on the CGT you pay today

This is the most underestimated factor in the "sell early" argument. When you sell, you hand over the CGT to the ATO immediately. That money stops compounding for you.

Example: You have $200,000 in unrealised gains on an ETF portfolio, 37% marginal rate.

CGT under current rules: $200,000 × 50% × 37% = $37,000
You lose $37,000 of invested capital today
At 8% per year, that $37,000 would grow to $54,680 over 5 years, $80,440 over 10 years

You're not just paying $37,000 — you're forgoing all the future returns that $37,000 would have generated. The longer your time horizon, the more expensive this is.

2. The transitional rules protect your existing gain

As explained above, the gain you've already built up doesn't switch to new-rules treatment just because you hold past July 2027. Only gains that accrue after that date face indexation. If the asset doesn't grow dramatically after 2027, the new-rules portion may be manageable.

3. Market timing risk

Selling now to beat a tax deadline means you're making an investment decision based on tax law, not fundamentals. If the asset falls in value after you sell, you've crystallised your gain, paid CGT, and then missed the recovery. Australian equities and property have generally rewarded long-term holders over tactical sellers.

4. Transaction costs are real

For property: agent fees (2–3%), conveyancing, possibly stamp duty on a replacement purchase. For shares: brokerage is trivial but the bid-ask spread on large positions is not. These costs reduce your net proceeds and eat into the CGT advantage of selling early.

5. The legislation might not pass

As at June 2026, the CGT changes have been introduced to Parliament but have not passed. If the legislation fails or is amended, selling early was unnecessary.

Worked example: property investor

Claire bought a Melbourne investment property in 2018 for $680,000. In mid-2026 it's worth $1,100,000. Her marginal tax rate is 47%.

Option A — Sell in May 2027 (current rules)

	Amount
Sale price	$1,100,000
Cost base (purchase + costs)	$700,000
Capital gain	$400,000
50% discount	−$200,000
Taxable gain	$200,000
CGT at 47%	$94,000
Net proceeds after CGT	$1,006,000

Option B — Hold and sell in 2029 (at $1,250,000, assumes 4% annual growth post-July 2027)

The ATO transition split (time-apportionment, from 2018 to 2029 = 11 years, pre-July 2027 = ~9 years):

Pre-July 2027 portion (9/11 of total gain):

	Amount
Pre-portion of gain	$400,000 × 9/11 = $327,273
50% discount	−$163,636
Taxable	$163,636
CGT at 47%	$76,909

Post-July 2027 portion (2/11 of total gain):

	Amount
Total gain by 2029	$1,250,000 − $700,000 = $550,000
Post-July 2027 portion (2/11)	$100,000
CPI indexed cost (2.5% for 2 years)	Relief of ~$35,000 (indexed cost portion)
Taxable gain (approximate)	~$65,000
CGT at 47%	$30,550

Total CGT in Option B: ~$107,459 Net proceeds in Option B after CGT: ~$1,142,541

Even with the higher CGT bill, Claire ends up with $136,000 more in Option B — because the property grew $150,000 more in those two additional years, which outweighed the extra ~$13,000 in CGT. The maths tips in holding's favour when the asset continues to grow solidly after July 2027.

But if Claire's property grew only modestly after July 2027, Option A would have been better. The key variable is what happens to the asset value after the transition date.

Worked example: ETF investor

Marcus has $180,000 in an ASX ETF, with a cost base of $40,000. Unrealised gain: $140,000. He's on a 32% marginal rate.

Option A — Sell in June 2027 (current rules)

	Amount
Capital gain	$140,000
50% discount	−$70,000
Taxable gain	$70,000
CGT at 32%	$22,400
Portfolio after CGT, available to re-invest	$157,600

Option B — Hold and sell in 2031 (5 years at 8% pa)

Portfolio value in 2031: ~$265,200 (using $180,000 compounded at 8% for 5 years, roughly)

Time split: from purchase say 2014 to 2031 = 17 years, pre-July 2027 = ~13 years (13/17 = 76% pre-split).

Pre-July 2027 portion (76% of total gain):

Total gain: $265,200 − $40,000 = $225,200
Pre-July 2027 share: $225,200 × 76% = $171,152
After 50% discount: $85,576 taxable
CGT at 32%: $27,384

Post-July 2027 portion (24% of total gain):

$225,200 × 24% = $54,048
Indexed cost (2.5% inflation for ~4 years post-July 2027): approx $4,000 relief
Taxable: ~$50,048
CGT at 32% (above 30% floor, so 32% applies): $16,015

Total CGT in Option B: ~$43,399 Portfolio after CGT in Option B: ~$221,801

Marcus ends up with $64,000 more in Option B even though he paid $21,000 more in CGT — because holding produced $85,000 more in portfolio growth. The compounding on the retained capital outweighed the tax difference decisively.

At a 32% marginal rate, the 30% minimum tax floor has minimal effect, which reduces the disadvantage of the new rules.

The decision factors at a glance

Factor	Favours selling before July 2027	Favours holding
Marginal rate	39–47%	0–32%
Inflation assumption	Low (below 2%)	High (above 3%)
Future growth of asset	Low or uncertain	Strong fundamentals
Time horizon	Under 2 years regardless	5+ years
Transaction costs	Low (ETFs, shares)	High (property)
Super balance	N/A	If super is alternative, use it
Transition complexity	Want simplicity	Comfortable with split method

What to do right now

Whether you decide to sell or hold, there are actions worth taking before July 2027 regardless:

Know your cost base. Calculate your exact cost base for each investment — purchase price plus all acquisition costs (stamp duty for property, brokerage for shares). The accuracy of this number affects both CGT calculations.
Get a valuation now if you're holding. A current market valuation of investment property establishes a useful baseline. A formal valuation as close to 1 July 2027 as possible will help maximise the pre-July 2027 portion if you choose to hold.
Review your marginal rate for the year of sale. If you control the timing, selling in a year with other large deductions or lower income reduces the marginal rate applied to the gain.
Don't make rushed decisions. The deadline is still over a year away. Most poor CGT decisions come from panic or herd behaviour. Take the time to model the actual numbers.
Talk to a registered tax agent. A general framework like this article helps — but your specific asset, holding period, marginal rate, and financial position may tip the decision differently.

Model your own situation: The CGT Comparison Calculator lets you enter your investment amount, marginal rate, holding period, and return assumptions to see the after-tax outcome under both scenarios side by side.

Frequently asked questions

Do I have to sell before July 2027 to keep the 50% CGT discount?

No. The transitional rules preserve the 50% CGT discount on gains accrued before 1 July 2027 even if you sell later. Only gains that accrue after 1 July 2027 will be subject to the new indexation rules. You don't have to sell by the deadline to protect your existing gain.

Is it better to sell shares or property before July 2027?

For shares and ETFs, transaction costs are minimal, which makes selling more practical. For property, agent commissions (2–3%) and conveyancing costs significantly reduce net proceeds — plus you'd need to buy again to stay invested, incurring stamp duty in most states. The cost-benefit calculation is generally stronger for shares than property.

What if the legislation doesn't pass?

If the CGT changes fail to pass Parliament, the current 50% discount rules continue indefinitely. Investors who sold early to beat the deadline would have paid unnecessary CGT and lost compounding. The legislation has been introduced and the Government has a Senate majority, but legislative uncertainty always exists.

Does the 30% minimum tax affect ETF investors in the 30% marginal bracket?

No — if you're already in the 32% bracket (including Medicare levy), the 30% minimum floor has no effect because your marginal rate already exceeds 30%. The 30% minimum primarily affects low-income investors (earning $18,201–$45,000) who currently pay CGT at an effective rate of 9% (18% × 50%) but would pay at least 30% under the new rules.

Does selling before July 2027 affect my franking credit refunds?

No. Franking credits relate to dividend income, not capital gains. Selling an ETF or share portfolio doesn't affect your right to claim franking credit refunds on dividends received during the period you held the investment.

This article is for general information only and does not constitute financial, tax or legal advice. The proposed CGT changes are subject to legislative passage and may differ from what is described here. Individual circumstances vary. Consult a registered tax agent or licensed financial adviser before making decisions based on this information.