What is CPI indexation for CGT in Australia?

CPI indexation adjusts the cost base of your investment property by the Consumer Price Index (CPI) to account for inflation. Instead of the 50% CGT discount, you only pay tax on the 'real' gain — the gain above inflation. This method was used in Australia from 1985 to 1999 and is being reintroduced from 1 July 2027 for properties purchased after Budget night.

Is CPI indexation better or worse than the 50% discount?

It depends on how long you've held the property and the inflation rate. For properties held a long time in a high-inflation environment, CPI indexation can be more favourable. For properties held a shorter time in a low-inflation environment, the 50% discount is usually better. ClearGain's calculator shows you the breakeven CPI rate for your specific property.

What CPI figures does the ATO use?

The ATO uses the All Groups CPI for Australia (weighted average of eight capital cities), published quarterly by the Australian Bureau of Statistics. The relevant index is the CPI for the quarter in which you purchased the property, compared to the CPI for the quarter in which you sell.

What is the 30% minimum tax rate?

From 1 July 2027, even after CPI indexation reduces your taxable gain, a minimum 30% effective tax rate applies to the real (inflation-adjusted) gain. This means investors at lower marginal rates will pay at least 30%, and investors at the 47% rate will pay 47% on the CPI-indexed gain.

Can I choose between CPI indexation and the 50% discount?

For grandfathered properties (purchased before Budget night), gains accruing before 1 July 2027 still get the 50% discount. For new builds, you can choose between the 50% discount and CPI indexation. For established properties purchased after Budget night, CPI indexation is the only method — there is no choice.

CPI Indexation Property CGT Australia: Post-2027 Changes

How CPI indexation works

Under CPI indexation, your cost base is adjusted upward by the increase in the Consumer Price Index between the date you purchased the property and the date you sell. This means you only pay tax on the gain above inflation — the "real" gain.

Indexed cost base = Cost base × (Current CPI ÷ Purchase CPI)

Real capital gain = Sale price − Indexed cost base

Tax payable = Real capital gain × max(marginal rate, 30%)

Example: Property purchased for $1,800,000 when CPI was 122.4. Sold when CPI is 155.0. Indexed cost base = $1,800,000 × (155.0 ÷ 122.4) = $2,279,412. Only the gain above $2,279,412 is taxable.

CPI indexation vs 50% discount: which is better?

The answer depends on the CPI growth rate during your holding period. There is a "breakeven CPI" — the inflation rate at which both methods produce the same tax outcome. Above the breakeven, CPI indexation is more favourable; below it, the 50% discount would have been better.

Scenario	50% discount tax	CPI indexation tax	Better method
Low inflation (1.5% p.a., 5yr hold)	$47,000	$52,000	50% discount
Moderate inflation (3.1% p.a., 5yr hold)	$47,000	$44,000	CPI indexation
High inflation (5% p.a., 10yr hold)	$47,000	$31,000	CPI indexation

Illustrative only. Based on $1M cost base, $1.5M sale price, 47% marginal rate. Not financial advice.

Frequently asked questions

Find your CPI breakeven rate

ClearGain's Scenario Modeller shows you the exact CPI rate at which the new rules become more favourable than the 50% discount for your specific property.

Calculate my breakeven

This page is for general information purposes only. CPI data sourced from the Australian Bureau of Statistics. Legislative references: Treasury Laws Amendment (Better Targeted Superannuation and Other Measures) Bill 2026–27; ITAA 1997 s114-1.

CPI Indexation Replaces the 50% CGT Discount from 2027

How CPI indexation works

CPI indexation vs 50% discount: which is better?

Frequently asked questions

Find your CPI breakeven rate