I have met people who sold an investment property in a hurry and found out later what the capital gains tax was. By then the contract was signed and the year was set. In retirement, the year you sell can matter as much as the price, because the gain is added to your income for that year.
How the gain is taxed
The gain is the sale price less the cost base: what you paid, the costs of buying and selling, and capital improvements, less the building deductions you claimed along the way. Until 30 June 2027, an individual who has held the property for more than a year can take 50 per cent off the gain before it is added to their income. A $500,000 gain becomes $250,000 of taxable income. Owned equally by a couple, that is $125,000 each.
Why retirement can be the cheaper year
A gain sold in a year with a full salary is taxed on top of that salary. Sold in a year with little other income, more of it falls in the lower brackets. That is why the timing of a sale, and whose name the property is in, can change the tax by a large amount. A property put mostly in one name for the deductions while working puts most of the gain on that person too. For gains made after 1 July 2027, a 30 per cent minimum tax limits that saving for a retiree who is not on the Age Pension.
What changes from July 2027
For gains made from 1 July 2027, the 50 per cent discount gives way to indexation, where the cost base rises with inflation. That gain carries a minimum tax rate of 30 per cent. The minimum does not apply in an income year you receive the Age Pension or another listed government payment. A Commonwealth Seniors Health Card on its own does not count. The gain up to 1 July 2027 keeps the 50 per cent discount, with the value at that date as the line. I set out the full change in Holding or selling down.
A couple in their late sixties plan to sell one of three properties. Sold the year before they stopped work, the gain would have sat on top of two salaries. Sold in their first full year of retirement, before July 2027, the same gain falls largely in the lower brackets. It is split between them and halved by the discount. They waited one year and kept a five‑figure sum. The decision to wait was made before the property was listed, not after.
The questions before the listing
- What is the cost base, and what deductions have reduced it?
- Whose name is the property in, and in what shares?
- What other income will you have in the year of the sale?
- Would the Age Pension apply in that year?
- Does selling before or after 1 July 2027 change the result for you?
Nicholas Lockhart
General information only. No advice is given. This article reflects the law as at 10 October 2026; an accountant can work through the figures for a particular sale.
Source: Australian Taxation Office, Tax reform: reforming negative gearing and capital gains tax (updated 29 June 2026).