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Grandfathered CGT Property: What It Means for Australian Investors

If you owned your investment property before Budget night (12 May 2026), you are grandfathered. Here is exactly what that means, what protection you have, and what you still need to plan for.

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What does grandfathering mean?

In tax law, "grandfathering" means that existing arrangements are protected when new rules are introduced. For the 2026–27 Budget CGT changes, the Australian Government grandfathered all investment properties where the contract of sale was exchanged before 7:30 PM AEST on 12 May 2026 — Budget night.

For grandfathered properties, the 50% CGT discount continues to apply to gains accrued before 1 July 2027. This is the most important protection: if you sell before the cliff, your entire gain gets the 50% discount (assuming 12+ months ownership).

However, grandfathering is not a complete exemption. If you hold past 1 July 2027, gains accruing after that date will be subject to the new CPI indexation rules. The longer you hold after the cliff, the larger the post-cliff portion of your gain — and the more the new rules affect your tax bill.

What grandfathering protects — and what it doesn't

✓ What grandfathering protects

  • 50% CGT discount on gains before 1 July 2027
  • Negative gearing against all income (salary, wages)
  • No quarantine of rental losses
  • Pre-1985 CGT exemption continues
  • Main residence exemption unchanged

⚠ What grandfathering does NOT protect

  • !Gains accruing after 1 July 2027 (new rules apply to post-cliff gains)
  • !The 30% minimum tax on post-cliff gains
  • !CPI indexation replacing the 50% discount on post-cliff gains
  • !Future policy changes beyond the 2026 Budget

The Bucket B transitional calculation

If you hold a grandfathered property past 1 July 2027 and then sell, your gain is split into two portions — called the "Bucket B" transitional calculation:

1

Pre-cliff gain (before 1 July 2027)

Calculated as: Total gain × (days held before cliff ÷ total days held). The 50% CGT discount applies to this portion.

2

Post-cliff gain (after 1 July 2027)

The remainder. CPI indexation applies, and a 30% minimum tax rate is imposed on the real (inflation-adjusted) gain.

Alternatively, you can obtain a formal valuation as at 1 July 2027 to establish the exact split. ClearGain's Scenario Modeller calculates both methods automatically.

Frequently asked questions

Is your property grandfathered?

Add your property to ClearGain and we'll automatically detect your grandfathering status, calculate your Bucket B split, and show you the exact dollar saving from selling before the cliff.

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This page is for general information purposes only and does not constitute financial product advice, tax advice, or legal advice. Always seek advice from a registered tax agent before making investment decisions. Legislative references: Treasury Laws Amendment (Better Targeted Superannuation and Other Measures) Bill 2026–27; ITAA 1997 s115-100.