This isn’t a one-size-fits-all question. Your decision depends on your mortgage structure, your equity position, and your cash flow. In this guide, we’ll compare three common scenarios for Australian homeowners and investors, using real data and practical tools. No jargon—just clear comparisons.
The 2027 Tax Change: What’s Actually Changing?
First, let’s clear up the confusion. The 2027 deadline refers to several state-level land tax reforms and federal CGT adjustments that take effect from July 1, 2027. The key changes are:
- Capital gains tax discount reduction: For properties purchased after May 9, 2023, the 50% CGT discount for assets held more than 12 months will be reduced to 33% for properties sold after June 30, 2027. This means if you sell after 2027, you’ll pay more tax on any gain.
- Land tax threshold changes: New South Wales, Victoria, and Queensland are phasing in lower land tax-free thresholds. For example, in NSW, the general threshold will drop from $1,075,000 in 2026 to $900,000 by 2028. This could add thousands to annual holding costs for investors with multiple properties.
- Negative gearing restrictions: While not confirmed federally, some states are considering limiting negative gearing for new investments after 2027.
These changes create a clear incentive to sell before the deadline if you’re planning to exit anyway. But holding could still make sense if your property generates strong rental yield or you’re in a low-tax bracket.
Scenario Comparison: Three Paths Forward
Let’s compare three realistic borrower profiles. Each faces the same 2027 deadline but different financial realities.
Scenario 1: The Over-Leveraged Investor
Profile: Sarah bought a Sydney apartment in 2021 for $800,000. She has a $720,000 mortgage at 6.2% interest. Her rental income covers only 60% of her mortgage repayments. She’s losing $1,200 per month after tax. Her property is now worth $850,000.
Option A: Sell before 2027
- Estimated sale price after costs: $810,000 (after agent fees, stamp duty, and marketing)
- Pay off mortgage: $720,000
- Remaining equity: $90,000
- CGT: If sold before July 2027, she qualifies for the 50% discount on the $50,000 gain ($850k - $800k). Tax on $25,000 at her marginal rate (37%) = $9,250
- Net cash after tax: ~$80,750
- Relief from negative cash flow: $14,400 per year saved
Option B: Hold past 2027
- Continued negative cash flow: $1,200/month = $14,400/year
- If sold in 2028 with same value, CGT discount drops to 33%. Tax on $33,333 gain = $12,333
- Plus three years of land tax increases (approx. $1,500/year extra)
- Net loss compared to selling now: roughly $25,000 worse
Verdict: For Sarah, selling before 2027 is clearly better. She stops the cash flow drain and locks in a tax-efficient exit.
Scenario 2: The Long-Term Cash Flow Positive Owner
Profile: James bought a regional Queensland house in 2019 for $350,000. Mortgage is $200,000 at 5.8%. Rent is $500/week, covering all costs plus $200 profit monthly. Property value: $520,000.
Option A: Sell before 2027
- After costs: $490,000
- Pay off mortgage: $200,000
- Equity: $290,000
- CGT on $170,000 gain: 50% discount = $85,000 taxable. At 32.5% tax = $27,625
- Net cash: ~$262,375
- But you lose $2,400/year passive income
Option B: Hold past 2027
- CGT discount drops to 33%: $112,200 taxable. Tax at 32.5% = $36,465
- Extra tax: $8,840
- But you keep $2,400/year income. Over 10 years, that’s $24,000
- Plus property may appreciate further (assume 3% annually = $15,600/year)
Verdict: Holding likely wins for James. The extra CGT cost is offset by ongoing income and growth. He should refinance to a lower rate to maximise cash flow.
Scenario 3: The Downsizer
Profile: Maria and Tom, both 62, own a $1.2 million home in Melbourne with no mortgage. They want to downsize to a $700,000 unit. They’re considering selling before 2027 to avoid land tax changes on their primary residence (which is exempt from CGT but may face higher council rates).
Option A: Sell in 2026
- No CGT on primary residence
- Stamp duty on new unit: $45,000 (Victorian rate)
- Net proceeds: $1.2m - $45k = $1.155m
- Buy unit for $700k, leaving $455k for retirement
Option B: Sell in 2028
- No CGT difference
- But Melbourne house values may drop 5% due to tax uncertainty (forecast by some analysts)
- Sale price: $1.14m
- After costs and stamp duty: $1.095m
- Retirement fund: $395k
Verdict: Selling now gives them $60,000 more for retirement. The tax deadline doesn’t directly affect primary residences, but market timing does.
Decision Framework: Your Personal Comparison
To decide for yourself, compare these three factors:
1. Your equity position Calculate your loan-to-value ratio (LVR). If your LVR is above 80%, selling may reduce mortgage stress. If below 60%, you have more flexibility to hold.
2. Your cash flow Is your property negatively geared? Use the RBA’s latest cash rate of 4.35% as a baseline. If your rental yield (annual rent ÷ property value) is below 3.5%, you’re likely losing money after interest costs. Compare that to the CGT savings from selling now.
3. Your time horizon If you plan to sell within 5 years anyway, the 2027 deadline makes selling now more attractive. If you’re holding for 10+ years, the extra CGT cost becomes smaller relative to potential growth.
Refinancing vs. Selling: A Third Option
Before you decide to sell, consider refinancing. If your property has gained equity, you might access that equity to invest elsewhere or pay down debt. For example:
- Current loan: $500,000 at 6.5%. Monthly repayment: $3,160
- Refinance to 5.8%: Monthly repayment drops to $2,935. Save $2,700/year
- Use $50,000 equity to buy shares or offset account: Could earn 4-5% return
Compare this to selling costs (agent fees 2-3%, marketing, legal) which can eat 5-7% of your sale price. Refinancing might be cheaper than selling if you want to hold but reduce costs.
Check current rates on ozLoan’s compare home loans page to see if you can beat your current deal.
Frequently Asked Questions
Q: Does the 2027 deadline affect owner-occupied homes? A: No, the CGT discount changes only apply to investment properties. Primary residences remain CGT-exempt. However, land tax threshold changes may affect owners of high-value homes in some states.
Q: What if I sell in June 2027—do I still get the old discount? A: Yes, as long as the contract is signed before July 1, 2027, you qualify for the current 50% CGT discount. Settlement can occur after the deadline.
Q: Should I sell if my property is negatively geared? A: Not automatically. Compare the ongoing negative cash flow against the tax savings from selling early. Use the framework above. If your negative cash flow exceeds $10,000/year, selling likely makes sense.
Q: How do I calculate my potential CGT savings? A: Use the ATO’s CGT calculator or a simple formula: Gain x (discount percentage) x marginal tax rate. For example, $100,000 gain with 50% discount at 37% tax = $18,500 tax. With 33% discount = $24,700 tax. The difference is $6,200.
Sources
- Australian Taxation Office. (2026). Capital gains tax discount changes from 1 July 2027. ATO.gov.au
- Hawkesbury Gazette. (2026, July 11). Property tax deadline 2027: what borrowers need to know.
- New South Wales Revenue. (2026). Land tax threshold changes 2025-2028. Revenue.nsw.gov.au
- Reserve Bank of Australia. (2026). Cash rate target. RBA.gov.au
- Real Estate Institute of Australia. (2026). Housing market outlook 2026-2027. REIA.com.au
For more comparisons on mortgage rates and refinancing options, visit ozLoan’s home loan guides and refinance calculator.