Capital Gains Tax Australia 2026: Key Changes & Smart Strategies

Capital gains tax is the tax you pay on the profit made from selling certain assets, such as real estate, shares, or digital currencies. The amount of CGT you pay depends on your individual tax rate, how long you’ve held the asset, and whether any exemptions or discounts apply. For many Australians, the main residence exemption and the CGT discount for assets held over 12 months have helped reduce the tax payable on gains.

From 2026, several updates to CGT rules are expected to take effect. These changes are designed to address issues such as speculative investment, digital asset reporting, and housing affordability. Key updates include:

Adjustments to the CGT Discount

The CGT discount for individuals has traditionally been 50% for assets held longer than 12 months. From 1 July 2026, properties acquired in certain capital cities may only be eligible for a 40% discount unless they meet new criteria, such as being classified as affordable housing or meeting sustainability standards. The 50% discount is expected to remain for most other assets and for properties acquired before this date.

Increased Reporting for Digital Assets

Digital asset platforms will be required to report user transactions directly to the Australian Taxation Office (ATO). This means that gains from cryptocurrencies and similar assets will be more visible to tax authorities, making it harder to overlook or underreport these transactions. CGT applies to digital assets, and the discount only applies if the asset is held for more than 12 months.

Changes for Foreign Residents

Rules around CGT exemptions for foreign residents will become stricter. The main residence exemption will generally not be available to non-residents, except in limited circumstances such as for diplomats or certain humanitarian cases.

Lower Reporting Thresholds

The threshold for reporting capital gains will be reduced, requiring individuals to declare gains above a lower amount than previously. Automated pre-fill options are being introduced to make reporting more straightforward, but it also means the ATO will have more data to cross-check.

The 2026 changes will affect a range of Australians, including property investors, digital asset holders, and retirees. Here’s how different groups may be impacted:

Property Investors

If you purchase an investment property in a major city after 1 July 2026, you may only be eligible for a reduced CGT discount when you sell, unless the property meets new criteria. This could result in a higher tax bill on any capital gain. Properties acquired before this date are expected to retain the current discount.

For those considering property investment, timing and the type of property purchased will play a larger role in future tax outcomes. If you’re unsure how these changes might affect you, consulting a professional such as a mortgage broker can help you understand your options.

Digital Asset Holders

With increased reporting requirements, gains from cryptocurrencies and other digital assets will be more closely monitored. Even short-term trades, such as flipping digital collectibles, can trigger a CGT event. The discount for assets held over 12 months still applies, but accurate record-keeping is essential.

Retirees Downsizing

The main residence exemption remains available for most Australians, but there are tighter requirements around how long you must have lived in the property. Generally, you need to have lived in the home as your primary residence for at least two of the past five years before selling to qualify for the exemption. This change may affect those who move out of their home before selling. If you’re considering downsizing, speaking with a professional such as an insurance broker can help you understand the implications for your financial plans.

With the new rules approaching, there are several steps you can take to manage your CGT liability:

1. Consider the Timing of Sales

The date you acquire and sell an asset can affect the discount you receive. Selling an asset acquired before 1 July 2026 may allow you to access the current 50% discount. For assets acquired after this date, especially in certain cities, a lower discount may apply. Review your portfolio and consider whether it makes sense to adjust your plans before the changes take effect.

2. Offset Gains with Losses

If you have investments that have declined in value, selling them in the same financial year as assets that have gained can help reduce your overall CGT bill. This approach, known as loss harvesting, is particularly relevant for investors in shares or digital assets during periods of market volatility.

3. Make Use of Superannuation Contributions

Australians over a certain age may be eligible to contribute proceeds from the sale of their home into their superannuation fund under downsizer contribution rules. This can help reduce tax on investment earnings and boost retirement savings. The rules around eligibility and contribution limits can change, so it’s important to check the latest requirements before making a decision.

4. Maximise Main Residence Exemption

If you’re planning to move out before selling your home, keep track of your residency dates. Living in the property as your main residence for at least two of the past five years is generally required to access the exemption. Careful planning can help ensure you don’t miss out on this benefit.

5. Keep Detailed Records

With increased data-matching and reporting, maintaining accurate records is more important than ever. Keep documentation of purchase and sale dates, costs associated with buying and selling (such as legal fees and agent commissions), and any improvements made to the asset. Good records can help you reduce your taxable gain and respond to any queries from the ATO.

Australia’s capital gains tax system continues to evolve in response to changes in the property market, investment trends, and government policy. The 2026 updates are part of a broader effort to address housing affordability, tax fairness, and the growing role of digital assets. While further changes may occur in the future, staying informed and reviewing your asset portfolio regularly can help you make confident decisions.

If you’re unsure how the changes may affect your situation, consider seeking professional advice. Reviewing your holdings and planning ahead can help you make the most of the new CGT landscape in 2026 and beyond.