Capital Gains Tax on Investment Property: What Changed and What Didn't
Capital gains tax on investment property in Australia 2025: what changed, what stayed the same, how the 50% discount works, and what investors should plan for.
The biggest story on capital gains tax in 2025 is what did not change. The 50% discount remains, despite years of political debate. But quieter changes around foreign residents have shifted, and they matter at sale time. Knowing the difference helps you plan an exit that keeps more of your gain.
How CGT on property works
Capital gains tax applies when you sell an investment property for more than it cost you. The gain is added to your taxable income in the year of sale.
The cost base is more than the purchase price. It includes stamp duty, legal fees, and capital improvements, all of which reduce the taxable gain.
Timing is everything. A large gain landing in a high-income year can push you into a higher tax bracket, which is why sale timing is a planning decision, not an afterthought.
What didn't change: the 50% discount
The cornerstone of property CGT is the 50% discount, and it survived another year of debate.
If you hold an asset for more than 12 months as an individual, you pay tax on only half the gain. It is one of the most valuable concessions in the system.
The number: Individuals who hold an investment property for more than 12 months pay capital gains tax on only 50% of the gain, under the long-standing CGT discount. That single rule can halve the tax on a successful sale, which is why holding period matters.
The discount remains a perennial political target. No change applied in 2025, but investors should treat any geared, growth-focused strategy as carrying long-term policy risk.
What did change: foreign resident rules
The quieter shifts hit foreign residents, and they took effect at the start of 2025.
The foreign resident capital gains withholding rate rose to 15%, and the previous price threshold was removed. That means withholding can now apply to property sales regardless of value where a foreign resident is involved.
For most domestic investors, this is background. But it matters if you become a non-resident, or if your circumstances change before a sale.
The direction of travel is clear. Governments are tightening the treatment of foreign property owners, and that trend is worth watching.
How to plan around CGT
CGT is one of the most manageable taxes in property, because timing is in your control.
Hold for more than 12 months wherever possible. Crossing that line halves the taxable gain.
Time the sale to your income. Selling in a lower-income year, or spreading sales across years, can reduce the rate applied to your gain.
Keep every record. A complete cost base, including improvements and buying costs, directly lowers the gain you are taxed on.
What investors should ask
Did the CGT discount get scrapped in 2025? No. The 50% discount for assets held more than 12 months remains in place. It is frequently debated but was not changed this year.
How can I legally reduce my CGT? Hold for more than 12 months, maintain a complete cost base, and time the sale to a lower-income year where possible. Spreading disposals across financial years can also help.
Does CGT apply to my own home? Generally no. The main residence exemption usually applies to your home, though it can be affected if you rent it out or use it to produce income.
Where do I confirm my position? CGT depends on your individual circumstances. This is general information, not tax advice, so confirm with a registered tax agent before you sell.
The bottom line
The headline on capital gains tax in 2025 is continuity: the 50% discount remains, and it is still one of the most valuable tools available to property investors. The changes that did land focused on foreign residents, raising the withholding rate and removing the threshold, which matters most if your residency status changes. CGT is highly manageable because timing and record-keeping are within your control, so plan the exit as carefully as the entry. Confirm your position with a tax professional before acting. Use Clear Yield's tracking tools to keep your cost base and records accurate and audit-ready, so you capture every deduction at sale time.