If you own an investment property that needs a renovation, this one’s for you.
The government is changing capital gains tax. And the date that matters most is 30 June 2027.
Under the new capital gains tax laws, the 50% capital gains tax discount ends for gains made after 30 June 2027. From 1 July 2027, gains on assets held for more than 12 months are indexed for inflation instead, with a minimum 30% tax rate.
So a renovation finished before that date should lift your property’s value while the old rules still apply to that gain. And there’s one step I wouldn’t skip.
Important to note: these changes have passed parliament but don’t start until 1 July 2027, some details are still being finalised, and tax law is complex. Before you make any decision, meet with your accountant and financial planner to work out the best outcome for your situation.
What’s Changing in Capital Gains Tax From 1 July 2027
The 50% discount is being replaced
Right now, if you sell an investment property you’ve held for more than a year, you pay tax on half the gain.
Under the changes, as summarised by Baker McKenzie and EY:
- The 50% discount keeps applying to gains made up to 30 June 2027.
- From 1 July 2027, your cost base is indexed for inflation instead.
- A minimum 30% tax applies to capital gains made from 1 July 2027, whatever your marginal rate.
- The changes cover individuals, trusts and partnerships. Not companies or super funds.
What stays the same
Your own home is still protected. EY reports that gains on your principal place of residence stay excluded.
This matters most if you own a rental, a holiday house or a property you’ve moved out of.
What about property you already own?
This is the bit renovators need to watch.
If you bought before 1 July 2027 and sell after it, the gain is split in two. The part up to 1 July 2027 gets the old 50% discount. The part after that is taxed under the new rules, starting from the property’s value at 1 July 2027, according to Pitcher Partners.
So the value of your property on 1 July 2027 could matter a lot.
For the wider budget, including negative gearing, read why this budget is quietly good news for active renovators.
Why Renovating Before 30 June 2027 Could Matter
Add the value while the old rules apply
A good renovation lifts a property’s value. Kitchens, bathrooms, paint and floors – Cosmetic Plus, no walls coming down.
If that lift happens before 30 June 2027, it’s part of the gain that the 50% discount still covers.
If it happens after, it’s part of the gain taxed under the new rules.
Same renovation. Different tax treatment. Just because of the date.
But don’t rush a bad renovation
A deadline is a terrible reason to overspend.
Renovate only where the numbers stack up. Rushing trades, skipping quotes or adding things the market won’t pay for can cost you more than any tax saving.
Strategy first. Then the reno.
The Step I Wouldn’t Skip: Get a Valuation
Why a valuation after your renovation
Once your renovation is finished, get a formal valuation.
Yes, it costs money.
But the details of how your property’s value at 1 July 2027 will be worked out are still being finalised, including whether it will reflect your improvements. A valuation gives you evidence of what the property was worth after the work, under the old rules.
That’s my interpretation of the new rules. Your accountant may have a view on timing, and on what kind of valuation they’d want.
Keep every record
The ATO already asks you to keep CGT records for five years after the year you sell. With a split gain, they’ll matter even more.
Keep these together:
- Your purchase contract, stamp duty and legal costs
- Every renovation invoice and receipt
- Before and after photos, with dates
- The valuation report
If you claim capital works deductions on a rental, the ATO says those generally reduce your cost base too. Your accountant will need those records as well.
The Bottom Line
The 50% discount is set to end on 30 June 2027 for future gains. Not for gains you’ve already made.
If your rental needs a renovation, timing could matter. Finish it before 30 June 2027 if the numbers work. Get a valuation once it’s done. Keep every record.
And speak with your accountant before you start.
If you’re weighing up whether to renovate, sell, hold or develop, Your Home’s Retirement Plan walks you through the options side by side.
This is general information only, not financial advice. Speak with a qualified accountant or financial adviser about your circumstances.
Capital Gains Tax Changes 2027: Your Questions Answered
When do the capital gains tax changes start?
From 1 July 2027. The changes passed parliament in June 2026. Gains made up to 30 June 2027 keep the 50% discount.
Will I pay capital gains tax on my own home?
Your main residence is still excluded under the new rules, as it is now.
Should I renovate my investment property before June 2027?
Only if the renovation makes sense on its own numbers. If it does, finishing before 30 June 2027 means the added value falls under the current rules. Talk to your accountant first.
Why get a valuation after renovating?
It records what the property was worth after the work, which may help if the value at 1 July 2027 affects how your gain is taxed.
