Australia capital gains: discount and home exemption
This guide explains the ATO’s capital-gains discount guidance for 2026–27 and the basic conditions for Australia’s main-residence exemption.
On this page
- 2026–27 individual discount
- 50%, subject to eligibility and at least 12 months of ownershipATO CGT discount
- Full home exemption land condition
- 2 hectares or less, alongside the other eligibility conditionsATO main residence eligibility
The 2026–27 discount guidance
For Tax Time 2026, the ATO describes a 50% capital-gains discount where an Australian tax resident has owned the asset for at least 12 months. This reduces an eligible capital gain, rather than setting a tax rate on sale proceeds. ATO CGT discount (opens in a new tab).
The ATO says the CGT changes announced in the 2026–27 Federal Budget are now law and apply from 1 July 2027, replacing the 50% discount for individuals with cost base indexation and a 30% minimum tax rate; they apply only to gains that accrue after 1 July 2027. ATO tax reform (opens in a new tab).
Ownership period and CGT event
The ATO excludes the acquisition day and the CGT-event day when assessing the 12-month ownership period. Where there is a sale contract, the event occurs on the contract date rather than settlement. ATO CGT discount (opens in a new tab).
Capital losses are subtracted from capital gains before an eligible discount is applied. Companies cannot use this discount, and foreign or temporary residency can restrict access to the full discount. ATO CGT discount (opens in a new tab).
Main-residence exemption conditions
The ATO describes a full main-residence exemption for an Australian resident where the dwelling was the home of the person, partner and other dependants throughout ownership, was not used to produce income, and is on land of 2 hectares or less. ATO main residence eligibility (opens in a new tab).
Under those conditions a capital gain on selling the home is exempt and a capital loss is ignored. A home that does not meet all conditions may qualify for a partial exemption. ATO main residence eligibility (opens in a new tab).
A home label alone is insufficient
The ATO considers occupation, personal belongings, mail, electoral-roll address and connected services when identifying a main residence. The property must have a dwelling and the person must have lived in it. ATO main residence eligibility (opens in a new tab).
Vacant land is not entitled to the main-residence exemption on its own. Income-producing use and foreign residency can affect exemption availability. ATO main residence eligibility (opens in a new tab).
Discount and exemption are separate questions
The main-residence exemption can remove a qualifying gain from tax entirely. If the full conditions are not met, partial exemption may still be available; the ATO’s page does not treat every property disposal as fully exempt. ATO main residence eligibility (opens in a new tab).
This guide’s discount explanation is scoped to 2026–27 and does not apply the changes that start on 1 July 2027. This general explanation provides no cost base, net capital gain, exemption allocation, future-year discount or personal tax estimate. No capital-gains calculator or numerical worked example is provided.