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Selling an investment property, shares, cryptocurrency or another asset for more than it cost you can create a capital gain.
However, working out the tax impact is not as simple as subtracting the purchase price from the sale price. Your result can depend on the asset’s cost base, selling costs, ownership period, capital losses, exemptions, discounts and your overall taxable income.
This guide explains how to calculate capital gains tax in Australia step by step, including property sales, the 50% CGT discount, capital losses and the latest capital gains tax changes announced in the 2026–27 Federal Budget.
Quick answer: To calculate a basic capital gain, subtract the asset’s cost base from its capital proceeds. You then apply any eligible capital losses, CGT discount or other concessions to determine your net capital gain. Your net capital gain is generally included in your assessable income and taxed at your applicable tax rates.
What is capital gains tax?
Capital gains tax (CGT) is the tax treatment that applies when a CGT event results in a capital gain. Common CGT events include selling an investment property, shares, cryptocurrency or other investments.
Importantly, CGT is not a separate tax charged at a fixed rate. A net capital gain is generally included in your assessable income and taxed at your applicable income tax rates.
The first question is therefore not “What CGT rate do I pay?” but rather:
What is my net capital gain for the financial year?
How to calculate capital gains tax: the 7 key steps
The ATO calculation process can be simplified into the following steps.
Step 1: Identify the CGT event
Start by determining what happened to the asset and when the CGT event occurred.
For a straightforward sale, the CGT event generally happens when you enter into the sale contract, rather than when settlement occurs. Other events, such as gifting an asset, transferring it or certain changes in ownership, can also trigger CGT.
The timing matters because the capital gain or loss is generally reported in the income year in which the CGT event occurs.
Step 2: Work out your capital proceeds
Capital proceeds are generally what you received, or are taken to have received, from disposing of the asset.
For a typical sale, the capital proceeds are generally the amount you receive from selling the asset. However, special rules can apply in situations such as non-arm’s-length transactions, gifts or transfers for less than market value.
For example:
Sale price = $700,000
That $700,000 is your starting point for calculating the gain.
Step 3: Calculate the asset’s cost base
The cost base is higher than the original purchase price. It can include eligible costs associated with acquiring, holding, improving and disposing of the asset.
Depending on the asset, these may include:
- Purchase price
- Certain legal and professional fees
- Stamp duty and transfer costs
- Costs associated with buying or selling the asset
- Eligible improvement and renovation costs
- Certain title and ownership-related costs
- Other eligible incidental expenses
Note: You cannot generally include a cost in the cost base if you have already claimed it as an income tax deduction. Adjustments may also be required for depreciation and other deductions. If you’re reviewing other expenses for your tax return, understanding EOFY Tax Deductions can also help you identify which costs may be claimable separately.
Example:
Purchase price: $500,000
Eligible acquisition and improvement costs: $30,000
Eligible selling costs: $10,000
Cost base = $540,000
Important: Ensure you keep invoices, contracts, settlement statements and other supporting records.
Step 4: Subtract the cost base from the capital proceeds
Now calculate the initial capital gain:
Capital proceeds − Cost base = Capital gain
Using the example:
$700,000 − $540,000 = $160,000 capital gain
If your capital proceeds are lower than the relevant cost base or reduced cost base, you may instead have a capital loss. Capital losses are generally used to reduce capital gains rather than your ordinary employment or business income.
Step 5: Apply capital losses
Next, consider capital losses from the current financial year and eligible unapplied capital losses from previous years.
For example:
Capital gain: $160,000
Less current-year capital loss: $20,000
Remaining capital gain = $140,000
Capital losses generally need to be applied before the CGT discount.
If your losses exceed your capital gains, the unused net capital loss can generally be carried forward to a future year. It cannot normally be used to reduce salary, wages or other ordinary income.
Step 6: Check whether a CGT discount applies
If you are an individual or trust and have held an eligible asset for at least 12 months, you may generally qualify for the 50% CGT discount under the current rules. The discount is applied after relevant capital losses have been deducted.
For example:
Remaining capital gain: $140,000
50% discount: $70,000
Discounted capital gain = $70,000
Note: The discount does not apply to each taxpayer or every type of gain. Companies, for example, are generally not entitled to the 50% CGT discount. Special rules can also apply to superannuation funds, including a Self Managed Super Fund, trusts and foreign residents.
Step 7: Calculate your net capital gain and tax payable
After applying applicable exemptions, losses, discounts and concessions, you arrive at your net capital gain.
That amount is generally included in your taxable income and taxed at your applicable marginal tax rates. This means two people with the same capital gain may pay different amounts of tax because their other income and circumstances differ. Keeping accurate records and reporting your capital gains correctly can also help you avoid common ATO Tax Return Audit Red Flags.
Using a capital gains tax calculator can provide a useful estimate, but it should not replace checking the underlying cost base, exemptions and tax treatment.
How to calculate capital gains tax Australia: a simple example
Suppose you purchase an investment asset for $500,000, incur $40,000 in eligible costs and later sell it for $700,000, paying $10,000 in eligible selling costs.
Cost base: $550,000
Capital proceeds: $700,000
Capital gain: $150,000
If you have a $20,000 eligible capital loss:
$150,000 − $20,000 = $130,000
If you are currently eligible for the 50% discount:
$130,000 × 50% = $65,000 net capital gain
The $65,000 is then generally included in your taxable income. Your actual tax payable depends on your broader tax position.
How to calculate property capital gains tax
Property is one of the most common areas where CGT calculations become complicated.
When selling an investment property, the calculation generally begins with determining the property’s capital proceeds and cost base. However, you also need to consider:
- whether the property was ever your main residence
- whether it was rented
- whether you made improvements
- whether deductions affect the calculation
If a property was your main residence for the entire ownership period and was not used to produce assessable income, the main residence exemption may mean the capital gain is disregarded. Partial exemptions may apply where the property was rented out or used to produce income.
The 6-year rule may also allow certain former homes to continue being treated as a main residence after the owner moves out, subject to specific conditions.
This is why how to calculate property capital gains tax cannot be reduced to a single universal formula.
How much capital gains tax will I actually pay?
There is no single CGT percentage that applies to everyone.
Your final tax bill can depend on:
- Your net capital gain
- Other taxable income
- Your marginal tax rate
- Capital losses
- Your ownership structure
- The asset owning period
- Applicable exemptions and concessions
- Whether the asset was used to produce income
For example:
If your final net capital gain is $70,000, that does not automatically mean you owe $35,000 in tax. The $70,000 is generally added to your taxable income and taxed accordingly.
Do you pay CGT if you have not sold the asset?
Generally, an increase in the market value of an asset does not by itself create an ordinary CGT liability. This is often referred to as an unrealised capital gain.
CGT generally becomes relevant when a CGT event occurs, such as a disposal. That said, certain CGT triggers and tax residency conditions can spark tax obligations even if a standard sale hasn’t taken place. It’s always best to verify complex or non-standard transactions.
What are the latest capital gains tax changes in Australia?
The Federal Budget capital gains tax changes announced in May 2026 are important for investors planning ahead.
Under the announced reforms, from 1 July 2027, the Government intends to replace the existing 50% CGT discount with an inflation-based system and introduce a minimum 30% tax rate on gains. The Government states that the reforms will apply to gains arising after 1 July 2027, with special treatment proposed for investors in new builds.
These are significant proposed changes, so anyone planning to sell an investment should consider the timing and obtain advice based on the rules that apply when the CGT event occurs.
The bottom line
Knowing how to calculate capital gains tax starts with getting the basics right:
- Identify the CGT event
- Establish the capital proceeds
- Calculate the correct cost base
- Work out the capital gain or loss
- Apply eligible losses and concessions
- Determine your net capital gain
Note: Property sales, inherited assets, former homes, cryptocurrency, investments held through trusts or companies, and other complex situations can require additional calculations.
If you are unsure how to calculate capital gains tax Australia rules for your circumstances, professional advice can help you avoid overlooking eligible costs, exemptions or concessions.
Get your numbers right the first time.
At TaxByte, we help you make sense of your tax obligations with tailored advice and seamless tax return lodgments. Whether you are based in Sydney, Melbourne, Brisbane, Adelaide, Canberra, Perth, or Darwin, our experienced accounting professionals are ready to assist.
Get in touch with our team, or book a time that suits you, and let’s make sure your next sale doesn’t cost you more than it should.