The proposed 2027 tax reform splits capital gains at 1 July 2027. Anything accrued before that date is taxed under current law (50% CGT discount for individuals on long-term gains). Anything accrued after sits in the new regime: no 50% discount, indexed gain only, with a 30% minimum tax floor. That mechanical change has triggered a wave of “should I sell before 1 July 2027?” questions. This post walks through one worked example so the trade-off is visible in dollars rather than abstract.
The mechanics in one paragraph
A property sold on or after 1 July 2027 has its gain split at the valuation as at that date. The pre-2027 portion retains current-law treatment - 50% CGT discount for individuals (s 115-100 ITAA 1997), 33.3% for SMSF accumulation, 0% for SMSF pension members, no discount for companies. The post-2027 portion is the inflation-adjusted (indexed) real gain only, with a 30% floor: if the marginal-rate tax on the gain is less than 30% of the gain, the floor applies.
The sample property
Byrz’s sample report uses a hypothetical $1.85M Sydney established residential investment, joint personal ownership, $1.628M interest-only loan at 6.8% (88% LVR), settled 15 September 2026. Below we compare two sell dates for the same property - an earlier exit on 30 June 2027 (pre-reform) versus a 1 July 2032 hold (post-reform, ~6 year hold).
Numbers below are drawn from the Byrz engine running both scenarios. They are illustrative, not advice.
Option A: sell on 30 June 2027 (pre-reform)
On a 9-month hold the property has barely moved. Capital gain is small. Current-law CGT applies with the 50% discount. Net cash to the owner is essentially the equity at settlement plus 9 months of cashflow drag.
- Forecast sale price: about $1.92M (growth at 5% p.a.).
- Cost base (purchase + acquisition costs): ~$1.95M.
- Gross capital gain: small or negative. Effectively no CGT.
- Loan balance: ~$1.63M (IO).
- Cashflow drag over the 9-month hold: ~$25–35k negative.
Net result: the owner walks away with roughly the deposit, less the cashflow drag, less transaction costs. No tax benefit from the sale, but no tax cost either - because there is no gain to tax.
Option B: hold to 1 July 2032 (post-reform, 6-year hold)
The same property, held six years, grows to ~$2.45M at 5% p.a. compound. After acquisition costs and capital improvements the adjusted cost base is around $1.86M. The CGT mechanic splits the gain at 1 July 2027:
- Pre-2027 portion (~9 months): small slice of the gain, current-law treatment, 50% discount applies.
- Post-2027 portion (~5 years): most of the gain. No 50% discount. Real (indexed) gain only, with the 30% minimum tax floor.
Byrz’s sample for this scenario lands at:
| Line | Value |
|---|---|
| Forecast sale price | $2,453,972 |
| Adjusted cost base | $1,860,558 |
| Selling costs (2.5%) | −$61,349 |
| Gross capital gain | $532,064 |
| Estimated CGT (under reform split + 30% floor) | −$90,065 |
| Loan balance at sale | −$1,492,400 |
| Net sale proceeds (after debt + tax) | $810,157 |
Plus a meaningful caveat: the cashflow drag over the 6-year hold sums to about −$446,954 under reform (negative-gearing offset on salary is restricted from 2027-28). And ~$400,000 of quarantined revenue losses sit unused at sale - they can only be applied against future residential rental income, which the owner may or may not have.
Side-by-side
| Outcome | Sell 30 Jun 2027 | Hold to Jul 2032 |
|---|---|---|
| After-tax equity (all-in) | $223,826 | $363,203 |
| CGT paid | ~$0 | $90,065 |
| Cashflow drag during hold | ~$25–35k | $446,954 |
| Quarantined losses unused | $0 | ~$400,000 |
| Capital growth captured | ~$73k | ~$604k |
The longer hold ends ~$139k ahead on all-in after-tax equity, even after ~$90k CGT, ~$447k in cashflow drag, and ~$400k in unused losses. On the dollars alone the long hold wins. The trade-off comes from somewhere else.
What the dollars do not capture
Three things the headline net-cash number leaves out:
- Cashflow risk. $446,954 over six years is ~$74k a year of out-of-pocket carry. Under reform that’s $74k of after-tax money - the salary offset that used to cushion it is gone. An investor who funds that carry from savings or other income needs to be confident it’s serviceable through the hold.
- Interest-rate risk. The numbers above assume a 6.8% rate held constant. A 1% shock on a $1.628M loan adds ~$16k/year of interest. Six years times $16k = ~$98k. The stress-test section of the Byrz report models this explicitly.
- Opportunity cost.Selling early frees ~$224k of equity (less transaction costs) to redeploy. If that redeployment outperforms the property’s growth + the lost cashflow drag, the early sale wins on a portfolio basis.
The question to actually ask
“Should I sell before 1 July 2027?” is the wrong framing. The CGT split is a mechanical event that affects what you keep, not when you should sell. The question worth asking is:
Given this property’s expected cashflow drag, growth profile and tax treatment under both regimes, does holding it produce a better risk-adjusted return than selling and redeploying the equity elsewhere?
That requires running both scenarios on your numbers, not the sample. The hold-vs-sell timing section of a Byrz property report models the property at multiple hold horizons (4 / 6 / 8 / 11 years) and shows after-tax IRR for each, so the trade-off surfaces in one row.
Caveats
The 2027 reform is a proposal as of late 2026. Final legislation, regulations and ATO guidance may change the CGT split mechanic, the discount treatment, the floor rate, or the start date. The numbers in this post assume the proposal as announced in the 2025 Federal Budget (Treasury, 25 March 2025).
This article is scenario modelling, not advice. Discuss any decision to sell or hold an investment property with a qualified adviser who can take your full position into account.
To see this calculation against your own property, hold horizons, and structure, the Byrz sample report shows the full output the tables above are drawn from. The property report flow runs the same engine on your inputs.