Capital gains tax (CGT) has long been a crucial consideration for Australian investors, property owners, and retirees. But with a suite of significant changes arriving in 2025, understanding how CGT works—and how to plan for it—has never been more important. Whether you’re eyeing the sale of an investment property, shares, or even digital assets, the new rules could make a real difference to your bottom line.
What Is Capital Gains Tax and Why Is It Changing in 2025?
Capital gains tax is applied to the profit you make when selling certain assets, such as real estate, shares, or crypto. The amount of tax you pay depends on your marginal tax rate, the length of time you’ve held the asset, and whether any exemptions apply. Traditionally, the main residence exemption and the 50% discount for assets held over 12 months have helped soften the blow for many Australians.
In 2025, the government is introducing several updates to CGT rules aimed at closing loopholes, targeting speculative investment, and addressing housing affordability. Key changes include:
- Adjusted CGT discount: For individuals, the 50% CGT discount will remain for most assets, but properties acquired after 1 July 2025 in certain capital cities will only be eligible for a 40% discount unless they meet new criteria for affordable housing or sustainability.
- Crypto and digital asset reporting: Platforms will now be required to report user transactions directly to the ATO, making CGT on digital assets harder to avoid.
- Foreign resident rules: Non-residents will see tightened rules on CGT main residence exemptions, with only limited exceptions for diplomats and certain humanitarian cases.
- New reporting thresholds: Individuals must now declare capital gains above $3,000 (previously $5,000), with automated pre-fill options rolling out via MyGov.
Real-World Scenarios: Who’s Impacted and How
The 2025 changes will impact a range of Australians. Here’s how:
- Property investors: If you bought an investment apartment in Sydney or Melbourne after 1 July 2025, and you sell after holding for more than a year, your CGT discount could drop to 40%. For a $200,000 capital gain, that’s an extra $5,000 in tax for someone on the 37% marginal rate.
- Crypto traders: The days of anonymous crypto gains are over. Platforms like CoinSpot and Binance will report directly to the ATO. Even a quick flip of NFTs could trigger a CGT event, with no discount for assets held less than 12 months.
- Retirees downsizing: The main residence exemption still applies, but only if you’ve lived in the home as your primary residence for at least two of the past five years. This tightens up the old “move back in before selling” trick.
For example, consider Sarah, who bought a Brisbane investment property in 2022. She plans to sell in late 2025. Because she purchased before the July 2025 cut-off, she retains the 50% CGT discount. Her friend Josh, however, buys a similar property in August 2025—he’ll only be eligible for a 40% discount unless his property is classified as affordable housing under the new criteria.
Smart Strategies for Minimising Your 2025 CGT Bill
With the new landscape, a little planning can go a long way. Here are some practical tips:
- Time your sales: If you’re considering selling an asset, the acquisition date matters. Selling before 1 July 2025 may lock in a more generous discount, while waiting could cost you.
- Offset gains with losses: If you have assets that have declined in value, selling them in the same financial year as a gain can reduce your CGT bill. This is especially relevant for share and crypto investors in a volatile market.
- Consider superannuation contributions: Eligible Australians over 55 can use the downsizer contribution rules to move up to $300,000 from the sale of their home into super, where earnings are taxed at just 15% (or 0% in pension phase). With rising property values, this remains a popular strategy to reduce tax and boost retirement savings.
- Maximise main residence use: If you’re planning to move out before selling your home, track your dates and consider living in the property for at least two of the past five years to protect your exemption.
- Keep meticulous records: With new reporting standards, the ATO is using more data-matching. Detailed purchase and sale records—including renovation costs, agent fees, and legal expenses—can help reduce your capital gain.
Looking Ahead: The Future of CGT in Australia
Australia’s capital gains tax regime is evolving quickly. As housing affordability, digital assets, and tax fairness dominate the policy debate, it’s likely that further tweaks will arrive in coming years. For now, the best move is to stay informed, review your asset portfolio, and plan your next moves with the 2025 rules in mind.
