Updated 07 October 2026
When people start looking into tax when selling investment property, it’s common to feel like you’re getting bits and pieces of information, but nothing that clearly shows how it all applies to you. Because the reality is, no two situations are the same.
For many Australians in their 50s and 60s, an investment property isn’t just another asset sitting in their portfolio it’s something you’ve held onto for years, often with the intention that it would help fund your retirement. And then at some point, the question starts to feel more real “Do I sell… and if I do, what does the tax actually look like and how do I minimise it?”
It’s a fair question, but this is where many people get stuck. The focus often goes straight to tax and while tax is important, it should never be the only factor driving your decision. What really matters is how this fits into your overall financial picture, your income in retirement, your superannuation, your lifestyle needs, and how all these pieces work together.
This blog has also been updated to reflect the 2026 Federal Budget changes to capital gains tax, including what the new rules could mean for investment property owners from 1 July 2027.
In this blog, we cover:
- Capital Gains Tax on Investment Property
- CGT on Investment Property Based on How You Own Your Property and 2026 Budget Changes
- How to Minimise Capital Gains Tax on Property
- How This Fits into Your Retirement Plan
- How Yield Advisors Can Help You?
Capital Gains Tax on Investment Property
The main tax when selling investment property is capital gain tax (CGT). In simple terms, CGT is the tax you pay on the profit you make when you sell your property, not the full sale price. To work out that profit, take your sale price and subtract what you originally paid, along with costs like stamp duty, legal fees, and in some cases, improvements and selling costs.
CGT on Investment Property Based on How You Own and 2026 Budget Changes
Another important piece people often overlook is that CGT doesn’t apply the same way for everyone. It can vary depending on how you own the property, whether you hold it in your personal name, through a trust, or inside an SMSF.
- If the property is in your personal name
The capital gain is added directly to your individual income in the year you sell. This means the amount of tax you pay depends on your marginal tax rate at that time. If you’re still earning a salary or other income, the gain could push you into a higher tax bracket.
Under the current rules, the 50% CGT discount may apply if you have held the property for more than 12 months
From 1 July 2027, the current 50% CGT discount will be replaced with the indexation method, with a minimum 30% tax rate applying to capital gains. The new rules will apply to gains that accrue from 1 July 2027. Gains that accrue before that date can continue to access the existing 50% discount under the transitional arrangements.
For property owners approaching retirement, this makes the timing of a sale an important part of the conversation. It doesn’t necessarily mean you should sell before 1 July 2027, but it does mean your potential sale date and the amount of growth that has occurred before and after that date are worth considering as part of your broader financial plan.
- If the property is held in a trust
With a trust, there can be more flexibility in how a capital gain is distributed among beneficiaries, depending on the type of trust and its structure.
Under the current rules, the 50% CGT discount may apply when the property has been held for more than 12 months. However, from 1 July 2027, the 2026 Budget changes will replace the current 50% discount with the indexation method for capital gains that accrue from that date.
How the gain is ultimately taxed will depend on the trust structure and the individual tax positions of the beneficiaries. This makes it important to look at the ownership structure alongside your wider family and retirement plans rather than considering CGT in isolation.
- If the property is held in a company
If you own the property through a company, the company generally pays tax on the capital gain at a rate of 25%–30%, depending on its structure. Unlike individuals and trusts, companies do not receive the 50% CGT discount, so the company pays tax on the full gain, and you may pay additional tax when you distribute profits as dividends. This will depend on your personal assessable income at the time.
- If the property is held in a SMSF
If you own the property through a SMSF, you’ll generally pay lower capital gains tax compared to owning it personally.
In the accumulation phase, the fund typically pays 15% tax, or 10% if you’ve held the property for more than 12 months (after applying the discount). If the fund is in pension phase, the capital gain can be tax-free. The 2026 Budget CGT changes do not apply to SMSFs.
While this can be a very tax-effective structure, it’s important to keep in mind that access to the sale proceeds is restricted under superannuation rules, and the timing of the sale can play a key role in the overall outcome.
How to Minimise Capital Gains Tax on Property?
Once you understand how capital gains tax works, the next question naturally becomes, what can you actually do about it?
The reality is, minimising capital gains tax isn’t about one single strategy. It’s about making a series of well-timed and well-structured decisions that work together within your broader financial plan.
Here are some of the key areas to think about:
- Time your sale carefully
One of the biggest levers you have is when you sell and this becomes even more important as you get closer to retirement.
If you own more than one property, it may be worth thinking about spacing out sales rather than selling everything in the same financial year. This can help avoid pushing yourself into a higher tax bracket all at once.
At the same time, while tax is important, it shouldn’t be the only factor driving timing. You may not always predict the perfect time to sell, but aiming to sell in reasonable market conditions rather than under pressure can put you in a much stronger position overall.
- Make use of the 50% CGT discount
If you’ve held the property for more than 12 months, you may be eligible for the 50% CGT discount (for individuals and trusts). What this means in practice is that you only add half of the profit to your taxable income and pay tax on it at your marginal rate.
- Utilise the 6-year rule, if it applies to you
If you previously lived in your investment property as your main residence, you may reduce or even eliminate CGT using what’s known as the 6-year rule.
In simple terms, this allows you to treat the property as your primary residence for up to six years after you move out, even if you rent it out during that time. If used correctly, this can significantly reduce the taxable gain when you eventually sell.
However, this strategy isn’t always straightforward. It depends on factors like whether you’ve treated another property as your main residence during that period, how long you’ve rented the property, and how the rules work over time. If you think this could apply to you, it’s worth having a conversation with an advisor so you can understand it properly and plan with confidence.
- Offset gains with capital losses
If you hold investments that are currently at a loss, like shares or other properties, you may be able to use those losses to reduce your capital gain.
It’s also worth noting that capital losses can be carried forward to future years if not fully used. This means even past losses may still be relevant when planning to sell an investment property today.
- Understanding your ownership structure
As we covered earlier, how the property is owned can significantly impact the outcome. In some situations, there may be opportunities (or limitations) depending on whether the asset sits in your personal name, a trust, or another structure.
- Consider contributions to super
In some cases, you can contribute part of the proceeds from a sale into superannuation, subject to contribution limits and eligibility. While this doesn’t reduce the capital gains tax on the sale itself, it can help move funds into a more tax-effective environment for retirement and lower your taxable income in the year you sell.
Over time, this can improve how your money is taxed and how it supports your income. To make the most of this, you need to plan the timing and structure carefully, taking into account your age, contribution limits, and overall super balance.
- Looking beyond just tax
This is the part that often gets missed. Minimising tax is important, but it shouldn’t be the only driver behind your decision.
Holding onto a property just to defer tax doesn’t always align with your broader retirement goals. In many cases, focusing only on tax can lead to decisions that don’t actually support your long-term financial position. Once sold, what will you use the money for?
What matters more is stepping back and looking at the bigger picture. That includes understanding any debt position, the income your property is generating, its growth potential, and whether it still fits within your retirement strategy.
How This Fits into Your Retirement Plan
This is where the conversation shifts from simply thinking about tax to thinking about strategy.
Don’t let tax be the only factor when selling an investment property, make sure the decision aligns with your long-term financial plan and what you’re trying to achieve. While tax is important, focusing only on minimising it can sometimes lead to decisions that don’t actually improve your overall position.
That means looking at how the proceeds will support your income, how it ties into your superannuation, whether it helps reduce any debt or simplify your finances, and how it aligns with the lifestyle you want in the years ahead.
Because in many cases, the best decision isn’t the one that results in the lowest tax, it’s the one that puts you in a stronger, more stable position overall.
How Yield Advisors Can Help You?
At Yield, we know that for most people, the first thing that comes to mind when selling an investment property is the tax and that’s completely fair. It can have a real impact on what you walk away with, and it’s not something you want to get wrong.
But after working with clients for over 20 years, we’ve seen that the real difference isn’t just in managing the tax, it’s in how all the pieces come together.
We’ve worked with many property investors at this stage not just calculating numbers but helping them to turn this decision into something that genuinely supports the next phase of their life. And what gives people confidence isn’t just knowing the tax, it’s knowing they’ve made a well thought-through decision.
At Yield, we help you to look at your situation properly and understand what this decision really means for you not just now, but over the years ahead.
Here’s how we support you through that process:
- First, we start by understanding your goals and why you’re considering selling your investment property.
- Help you understand your current tax position and then model different scenarios, so you can clearly see how each option plays out, whether you sell now or later.
- Guide you on how to prioritise and structure your properties, considering tax, debt position, growth potential, risk, and long-term goals.
- Help you avoid rushed decisions and sell at the right time to maximise the value of your property.
- Show you how this decision translates into your future income, so you know what it means for your lifestyle.
If you’re thinking about selling an investment property and want clarity around the tax and what it means for you, contact us today to book your initial free consultation. From there, you’ll be connected with an advisor to discuss your situation and explore how we can help you make the most of property decision.
