Methodology / Configuration 2026-08-13

How these calculators work.

Nothing here is hidden behind a tooltip. This is the full set of formulas, rates, assumptions and limitations, so you can check the arithmetic or hand it to an accountant who will.

What is in scope.

Both calculators model an Australian-resident individual holding a 100% interest in a single residential investment property, with no main-residence or mixed use, and no other capital gains or losses in play. They report basic income tax only.

Included

Resident individual marginal rates and thresholds
The 1 July 2027 CGT transition and deferred gain
Cost-base indexation and the 30% minimum tax test
Loss quarantining and the carried-forward balance
The new residential dwelling carve-outs

Excluded

Medicare levy and Medicare levy surcharge
Working Australians tax offset and the standard work-related-expense deduction
Low-income and other tax offsets
HELP repayments and PAYG credits
Land tax, stamp duty and every other state tax
Foreign and temporary resident rules

Because both calculators report the difference between two treatments rather than a total tax bill, these exclusions distort the answer far less than they would distort a return. They are still exclusions. Anything that falls outside the supported path stops the calculation and says why, rather than quietly approximating.

Rate tables.

Resident individual rates, excluding the Medicare levy. The rate on the $18,201–$45,000 band steps down under the legislated tax cuts. Thresholds are unchanged through 2027-28, and nothing further is legislated beyond it.

Taxable income2025-262026-272027-28

$0 – $18,200 0%0%0%

$18,201 – $45,000 16%15%14%

$45,001 – $135,000 30%30%30%

$135,001 – $190,000 37%37%37%

$190,001 and over 45%45%45%

A sale after 2027-28 uses the 2027-28 scale unchanged, because no later rates exist to use. The result says so when that happens.

CGT formulas.

The enacted treatment splits a property held across 1 July 2027 into two gains. The Act deems a sale just before that date and a reacquisition at market value on it.

preReformCostBase = purchasePrice + incidentalCosts + preReformCapitalCosts

deferredPreReformGain      = max(0, valueAtReformStart - preReformCostBase)
deferredPreReformTaxable   = deferredPreReformGain x 0.50

indexedResetBase   = valueAtReformStart x factor(2027-07-01 -> saleDate)
indexedPostCosts   = SUM(item.amount x factor(item.date -> saleDate))
postReformCostBase = indexedResetBase + indexedPostCosts + thirdElementCosts
postReformGain     = max(0, salePrice - saleCosts - postReformCostBase)

taxableIncome      = incomeBeforeCgt + deferredPreReformTaxable + postReformGain
baseIncrementalTax = tax(taxableIncome) - tax(incomeBeforeCgt)

gainTaxAtMarginal  = tax(taxableIncome) - tax(incomeBeforeCgt + deferredPreReformTaxable)
minimumTaxTopUp    = max(0, postReformGain x 0.30 - gainTaxAtMarginal)
enactedTax         = baseIncrementalTax + minimumTaxTopUp

Why the reset cost base is indexed

The market value fixed on 1 July 2027 becomes a first-element cost base acquired on that day, so it is indexed from the September 2027 quarter to the quarter of the sale. Section 110-36(1A) note 4 states that for a deemed-reacquired asset "indexation … will happen only for the period the asset is held on or after 1 July 2027", and s 960-275(1B) note 1 confirms the indexation factor covers "expenditure taken to have been incurred on 1 July 2027". Leaving that base unindexed would overstate the post-reform gain, and the error would compound the longer the property is held.

Why the 30% floor only touches the later gain

Section 102-6 puts the deferred pre-2027 gain in a separate defined category from the post-2027 gain, and s 119-5(2) covers only the latter. The top-up itself follows the s 119-10(2) method statement, which isolates the ordinary tax already attributable to that slice by removing it from taxable income, then charges only the shortfall against 30%. It is a floor on the tax attributable to that gain, not a flat 30% impost, and it is zero whenever your marginal rate on the slice already exceeds 30%.

New residential dwellings

Section 115-102 keeps the 50% discount for a qualifying new residential dwelling by default, and s 119-5(2)(b) puts that gain outside the minimum tax altogether. Section 115-102(5) lets you choose indexation instead, and s 114-30(2) makes the two mutually exclusive. When you confirm a new dwelling, the calculator headlines the discount and shows the indexation alternative beside it.

Negative gearing formulas.

totalDeductions   = deductibleCashCosts + nonCashDeductions
preTaxCashFlow    = grossRent - deductibleCashCosts - loanPrincipal

currentResult     = grossRent - totalDeductions
currentTaxChange  = tax(income + currentResult) - tax(income)

excessLoss        = max(0, totalDeductions - grossRent)
propertyIncome    = max(0, grossRent - totalDeductions)
openingLossUsed   = min(openingQuarantinedLoss, propertyIncome)
enactedResult     = propertyIncome - openingLossUsed
enactedTaxChange  = tax(income + enactedResult) - tax(income)

closingQuarantine = openingQuarantinedLoss - openingLossUsed + excessLoss
cashFlowImpact    = (preTaxCashFlow - enactedTaxChange)
                  - (preTaxCashFlow - currentTaxChange)

A negative taxChange is a tax saving. A negative cashFlowImpact means quarantining reduces this year's after-tax cash flow. Loan principal is cash out the door but never a deduction; non-cash deductions reduce tax but never cash — the two are kept apart deliberately, because conflating them is the most common error in property cash-flow models.

The grandfathering test

The cut-off is 7:30 pm ACT legal time on 12 May 2026, and it is exclusive — a contract entered at exactly 7:30 pm is caught by the new rule. Section 26-155(3) gives you an ownership interest from the time you enter the contract, not settlement, so an off-the-plan contract signed before the cut-off stays grandfathered however long it takes to settle. The calculator compares instants, not wall-clock strings, so a contract time entered in another zone still lands on the right side of the line.

Assumptions you control.

Future CPI

Not knowable, and not invented here. You either state an annual inflation assumption — defaulting to 2.5%, the midpoint of the RBA's target band — or enter official index numbers. Factors compound by calendar quarter and can never fall below 1. The result shows which basis you used and the factor applied to every line.

Market value at 1 July 2027

Your figure. The Act allows a valuation or a prescribed apportionment method, and the choice does not have to be made until you lodge for the year you actually sell.

Holding period

Both the deferred gain's discount and the new-dwelling discount assume the property was held more than 12 months. A shorter holding period stops the calculation.

Rates beyond 2027-28

Assumed unchanged, because nothing later is legislated. Any sale after that year inherits the 2027-28 scale and the result says so.

Known limitations.

The new-dwelling definition is not settled. It is delegated to a ministerial legislative instrument that has not been made. Treasury's exposure draft proposes a property acquired within 24 months of a certificate of occupancy being issued, with a broad anti-avoidance rule attached, and consultation on it closed in August 2026. Nothing here hard-codes that test — you confirm eligibility, the calculator never infers it.
One property, not a portfolio. A quarantined loss can be applied against other residential rental income or eligible residential capital gains. A single-property model cannot see those, so it applies an opening balance only against the same property's income and stops if you say you hold others.
Capital losses are not modelled. A deferred or post-reform loss changes the statutory ordering, so the calculator stops rather than guessing at it.
Quarantined amounts interact with the CGT calculation. Under s 26-155(1) a quarantined amount can be applied within the s 102-5 method statement before any remainder carries forward. The annual model shows the carry-forward, not that interaction.
Minimum-tax exemptions are not applied. Section 119-15 exempts recipients of certain payments, including the age pension, JobSeeker and the disability support pension. The calculator does not ask, so it may show a top-up that would not apply to you.
The two calculators are independent. Selling a property with a quarantined balance connects them in reality. Modelling that properly needs your whole position, which is what a tax agent is for.

Sources.

Enacted law Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (No. 49, 2026)
Assented 26 June 2026. Schedule 1 replaces the 50% CGT discount with cost-base indexation and adds a 30% minimum rate of tax on capital gains. Schedule 2 limits negative gearing for residential property to new builds.
Enacted law ATO — Tax reform: negative gearing and capital gains tax
The ATO's administrative guidance on both measures, including the transition and grandfathering rules.
Enacted law Second reading speech — Treasurer
Confirms the 50% discount applies to gains accruing up to 1 July 2027, indexation applies after, and a 30% minimum rate applies to real gains accruing from 1 July 2027.
Enacted law Budget 2026–27 — Negative gearing and capital gains tax factsheet
Sets the 7:30 pm ACT legal time, 12 May 2026 grandfathering cut-off and the 2027-28 start year for loss quarantining.
Detail pending Treasury — CGT and negative gearing: Tranche 2 consultation
The detailed definition of a qualifying new residential dwelling, and several transition mechanics, are still being consulted on. Do not treat new-build eligibility as settled.
Enacted law ATO — Tax rates for Australian residents
The resident marginal rate scale used for every tax figure on this page.
Enacted law Legislated tax cuts to the $18,201–$45,000 bracket
The rate on the second bracket falls to 15% from 1 July 2026 and 14% from 1 July 2027.
Detail pending RBA — Inflation target
The 2–3% target band is the basis for the default inflation assumption. It is an assumption, not a forecast, and not a source of official CPI figures.

Configuration version 2026-08-13. If the rate tables or the reform detail change, that version changes with them and every result carries it.