You've held an investment property for years. It's gone up in value. Now you're thinking about selling. Before you list it, it's worth understanding exactly what the tax bill could look like — because for long-held properties, CGT can be the single largest cost of the entire transaction.
How CGT Is Calculated
Capital gains tax is not a separate tax. It's the inclusion of a capital gain in your assessable income, taxed at your marginal rate. The gain is calculated as:
Capital gain = sale price minus cost base
The cost base includes the original purchase price plus eligible acquisition costs (stamp duty, legal fees), capital improvement costs, and certain holding costs. It does not include the ongoing interest or maintenance you've claimed as deductions while renting the property — those have already been offset against income.
If you've held the property for more than 12 months as an individual or via a trust, you're eligible for the 50% CGT discount. That means only half the capital gain is added to your taxable income for that year.
What the CGT Bill Could Look Like
Here's an illustrative example. Say you bought an investment property for $450,000 ten years ago and it's now worth $750,000. Your capital gain is $300,000. After the 50% discount, $150,000 is added to your taxable income.
At a 37% marginal rate, that's approximately $55,500 in additional tax. At 45%, approximately $67,500.
A property with a $200,000 capital gain at a 37% marginal rate with the 50% discount would generate approximately $37,000 in CGT.
These are simplified illustrations — your actual position will depend on your total income in the year of sale, cost base calculations, and any prior year losses. Your accountant will calculate the actual figure for your situation.
The Full Cost Picture When You Sell
CGT is just one layer. The full cost of selling an investment property typically includes:
- Capital gains tax (as above)
- Agent commission: typically 2–2.5% + GST in Queensland
- Marketing costs: $3,500–$7,000
- Conveyancing: $1,200–$2,500
- Holding costs during campaign: mortgage, rates, insurance
On a $750,000 property with a $300,000 capital gain, the combined tax and transaction cost can comfortably reduce net proceeds by $80,000–$110,000. That's the real number to plan around, not the gross sale price.
Earn from your investment property without a CGT-triggering sale.
Explore the income model →When Not Selling Makes More Sense
Selling triggers CGT. Holding doesn't. If you don't have an urgent need for the capital — and the property can generate income — the alternative is to keep the asset and earn from it more effectively.
If the property is underperforming as a rental (poor yield, dated presentation, single-tenancy income below what the property could generate), there may be a significant income uplift available without a sale. A structured co-living model, for example, can double gross rental income from the same property — without triggering any CGT event.
Eleva's property income model delivers this: above-market rental income, fully managed, without you needing to sell the asset or manage the tenancy yourself.
When Selling Is the Right Call
There are legitimate reasons to sell even when the CGT bill is significant:
- Liquidity need: you need the capital for another purpose and the cash flow from the property doesn't meet that need
- Major life event: retirement, divorce, estate administration
- Portfolio rebalancing: diversifying out of concentrated property exposure
- Property condition: a property that requires major capital expenditure to remain lettable
If selling is the right call, plan the timing carefully with your accountant. The year of sale matters — if you're expecting lower income in a particular year (retirement, career break), selling in that year may reduce the effective tax rate on the gain.
This is general information only. Speak to your accountant or tax adviser before making financial decisions.