CGT Cost Base Calculator Australia 2026-27 | Property, Shares & Inherited Assets

Updated for the 2026-27 financial year

Your cost base is everything it cost you to buy, hold, improve and sell an asset, and it is the number that decides how much capital gains tax you pay. The higher your cost base, the smaller your capital gain. Most people leave money in it because they do not know which costs count, which costs are excluded, and which deductions the ATO claws back. From 1 July 2027 the rules change again: the 50% CGT discount ends for individuals and trusts, your cost base is indexed for inflation instead, and assets you already own are treated as sold and bought again at market value on that date. Getting your cost base right now matters more than it ever has.

This guide sets out the five elements of the cost base, what you cannot add, how the cost base turns into a capital gain and a tax bill, the rules for property, inherited assets, shares and crypto, and what the 2027 change means for you, with worked examples and a calculator to estimate your own figures.

What Is a Cost Base?

The cost base of an asset is the total of what it cost you to acquire it, to own it, to improve it and to sell it, worked out under the rules in the tax law. When you sell, the ATO compares what you received (the capital proceeds) with your cost base. If the proceeds are higher, the difference is your capital gain. If they are lower, you use a slightly different figure, the reduced cost base, to work out a capital loss.

Every dollar you can legitimately add to your cost base comes straight off your capital gain, and the gain is what you pay tax on. That is why the cost base matters more than any other number in a CGT calculation, and why the ATO expects you to be able to prove each part of it.

You may see the American term cost basis in overseas articles and software. In Australia the term is cost base, and the rules below are the Australian rules.

The Five Elements of the Cost Base

The ATO sets out five elements. Add them together and you have your cost base. Each element has its own rules about what counts.

Element 1: What you paid for the asset

The money you paid, or the market value of any property you gave, to acquire the asset. For a house this is the purchase price on the contract. For shares it is the price of the parcel. It does not include the loan you took out to pay for it; the loan is how you funded the purchase, not part of its cost.

Element 2: Incidental costs of buying and selling

Ten types of cost you incur when you buy the asset or when you sell it. This is where stamp duty and legal fees sit, not in element 1.

• Fees for the services of a surveyor, valuer, auctioneer, accountant, broker, agent, consultant or legal adviser
• Costs of transfer, and stamp duty or other similar duty
• Advertising or marketing costs to find a buyer or seller (but not entertainment)
• The cost of a valuation or apportionment done to work out your capital gain or loss
• Search fees, such as title searches
• The cost of a conveyancing kit or a similar cost
• Borrowing expenses, such as loan application fees and mortgage discharge fees, where they were not claimed as a deduction
• Expenses you incur as a direct result of your ownership ending

Element 3: Costs of owning the asset

Rates, land tax, insurance, repairs and maintenance, and interest on money you borrowed to buy the asset or to pay for improvements. These are the holding costs, and they come with four conditions.

• You can include them only if they were not deductible. If you claimed them, or could have claimed them, as a tax deduction in any year, they stay out. This is the rule that excludes them for most rental properties and lets them in for a holiday house or vacant land.
• You cannot include them if you acquired the asset before 21 August 1991.
• You cannot index them for inflation.
• You cannot use them to create or increase a capital loss. They can reduce a gain to nil, but no further.

Element 4: Capital costs to increase or preserve value, or to install or move the asset

Capital costs you spent to increase or preserve the value of the asset, or to install or move it. A renovation, an extension, a new kitchen, a new roof or a granny flat all sit here. Repairs and maintenance do not, because they keep the asset in its existing condition rather than improving it; for a rental they are usually deductible each year instead.

Element 5: Capital costs of defending your title

Capital costs of preserving or defending your ownership of, or rights to, the asset. Legal costs in a boundary dispute or a challenge to your title are the usual examples. The ATO also gives the example of paying a call on shares.

Which costs count for which asset

What You Cannot Add to Your Cost Base

Four things trip up most people. Each of them removes money from the cost base that the reader thought was there.

Anything you claimed, or could have claimed, as a deduction

The cost base and the reduced cost base do not include any cost you can claim as a tax deduction. The ATO applies this to costs you claimed or could have claimed, so leaving a deductible cost off your tax return does not let you move it into the cost base instead. For a rental property this rule removes interest, rates, insurance, repairs and borrowing expenses, because all of them are deductible against the rent.

Capital works and depreciation you claimed on a rental

If you claimed capital works deductions (the 2.5% a year building allowance, sometimes called Division 43) on a property you acquired after 7:30 pm on 13 May 1997, you must reduce your cost base by the amount you claimed or could have claimed. The ATO states that capital works deductions cannot be included in the cost base or the reduced cost base. The only exception is a property you acquired at or before that time where the capital works expense was incurred by 30 June 1999.

The ATO’s own example makes the mechanics plain. Brett spent $30,000 on capital repairs and was able to claim $254 of capital works deductions before he sold ($30,000 at 2.5% for 124 of 365 days). His cost base includes $29,746 for the repairs, not $30,000. Over a long ownership the amount removed is much larger: the ATO’s rental property example removes $35,000 of capital works deductions and $5,000 of decline in value deductions from $796,000 of costs.

The loan principal, and interest you deducted

The amount you borrowed is never part of the cost base. The cost base counts what you paid for the asset and what you spent on it, however you funded it. Interest on the loan is a holding cost under element 3, so it goes in only where it was not deductible, which means a holiday house, vacant land or a home you never rented. Interest that was capitalised into the loan is still interest and follows the same rule.

GST credits, recouped amounts and amounts paid by someone else

If you are registered for GST and claimed input tax credits on a cost, you reduce that element of the cost base by the credits. You also leave out any cost you later recouped, such as an insurance payout or an amount someone else paid on your behalf, unless the recouped amount was included in your assessable income.

From Cost Base to Capital Gain to Tax

Once you have the cost base, the rest of the calculation follows a fixed order. Take your capital proceeds, subtract your cost base, apply any capital losses, apply the discount if you qualify, and add what is left to your income for the year.

Capital proceeds − cost base = capital gain, then − capital losses, then × 50% if held over 12 months = net capital gain

The 50% CGT discount applies to individuals and trusts that owned the asset for at least 12 months before the CGT event. Complying super funds discount by 33.33%. Companies get no discount. Capital losses, including losses carried forward from earlier years, must be subtracted from your gains before the discount is applied; our guide to capital losses and how to carry them forward covers that step.

The net capital gain is added to your taxable income and taxed at your marginal rate. For 2026-27 the resident rates are 15% on income over $18,200, 30% on income over $45,000, 37% on income over $135,000 and 45% on income over $190,000, plus the 2% Medicare levy. A gain can push part of your income into a higher bracket, which is why the tax on a gain depends on what else you earned that year.

Cost Base of a Property

Property is where the cost base is largest, where the most costs get missed, and where the capital works rule bites. Work through the ownership in order: buying, holding, improving, selling.

Buying and selling costs

Stamp duty, conveyancing and legal fees, title and search fees, and a buyer’s agent fee all belong to element 2 when you buy. Agent commission, advertising and the legal fees on the sale belong to element 2 when you sell. The date that matters for CGT is the contract date, not settlement: the ATO’s rental example has a contract signed in June 2026 and settled in November 2026, and the gain belongs to the 2025-26 year.

Renovations versus repairs

A capital improvement increases the value of the property or extends its life, and it belongs in element 4. Building an extension or a granny flat, installing a new kitchen or bathroom, constructing a garage or shed, and rewiring or replumbing the house are all improvements. A repair restores something to its previous condition, such as fixing a leaking tap, patching plaster or replacing a few broken tiles. On a rental, repairs are deductible in the year you pay for them, so they cannot go into the cost base. On a holiday house or a home, repairs are holding costs under element 3.

For a property you acquired before 20 September 1985, a major improvement made after that date can be treated as a separate CGT asset in its own right. The ATO treats an improvement as major when its cost is more than 5% of the sale proceeds and more than the improvement threshold for the year of sale, which is $194,165 for 2026-27 ($187,962 for 2025-26).

The capital works clawback on a rental

Every dollar of capital works deductions you claimed, or could have claimed, comes off the cost base when you sell. That includes deductions on the original building where it qualifies and deductions on any renovation you did. Keep your depreciation schedule; it is the document that proves the figure.

Holiday homes and vacant land: the holding costs rule

A holiday house you never rent, or a block of land you hold before building, produces no income, so its holding costs are not deductible. That is exactly what lets them into the cost base under element 3, provided you acquired the asset after 20 August 1991. Interest, rates, land tax, insurance, repairs and maintenance all count, year after year. Two limits apply: these costs cannot be indexed, and they cannot create or increase a capital loss.

A home you later rented out

If you bought your home on or after 20 September 1985, first used it to produce income after 20 August 1996, and would have been entitled to the full main residence exemption before that, you are taken to have acquired it at its market value on the day it was first used to produce income. Your original purchase price no longer matters; the market value on that day becomes element 1 of your cost base, so get a valuation at the time. The ATO’s example is Erin, who bought a house for $450,000 in 2014, rented it from 2 August 2025 when it was worth $650,000, and sold it in June 2026 for $696,000: her capital gain is $46,000, not $246,000. If you sell within 12 months of first renting it, you cannot use the discount.

If you move out of your home and rent it, you can also choose to keep treating it as your main residence for up to six years, and indefinitely if it is not rented, under the six year rule. You cannot treat any other property as your main residence for the same period, apart from up to six months when you are moving house.

Subdivided land

If you subdivide land and sell one lot, you apportion the original cost base across the lots on a reasonable basis, usually by area or value, and add the costs that relate only to the lot you sold, such as the survey, the subdivision application and any works on that lot.

Cost Base of an Inherited Property or Asset

When you inherit an asset, your cost base depends on when the person who died acquired it and how they used it. The ATO applies three rules.

• They bought it before 20 September 1985. Your cost base is the market value of the asset on the day they died.
• They bought it on or after 20 September 1985. You inherit their cost base as it stood on the day they died, including the costs they incurred. Your gain is measured from their purchase, not from the date of death.
• It was their main residence. If the property passed to you after 20 August 1996, and just before they died it was their main residence and was not being used to produce income, your cost base is the market value on the day they died, whenever they bought it.

In every case you add your own costs, and you can also include any costs the executor (the legal personal representative) would have been able to include had they sold the asset instead of passing it to you. A separate rule can wipe out the gain altogether: if the home was the deceased’s main residence and not used to produce income at their death, and you sell it under a contract that settles within two years of the death, or it was lived in only by their spouse or a beneficiary until the sale, the sale is fully exempt.

Cost Base of Shares, ETFs and Crypto

The same five elements apply to shares, exchange traded funds and crypto assets, with fewer moving parts. Element 1 is what you paid for the parcel. Element 2 is the brokerage or exchange fee when you bought and when you sold. Element 3 rarely applies, because interest on a loan used to buy income producing shares is deductible. There is no element 4 or 5 for most investors.

Which parcel did you sell?

If you bought shares in the same company at different times and sell only some of them, you need to identify which ones you sold. The ATO accepts your selection where your records support it, or a first in first out approach, and in limited cases an average cost where the shares were bought on the same day with identical rights. Keep the records the ATO lists for shares: purchase dates and amounts, brokerage on each trade, sale prices, and details of splits, consolidations, returns of capital, takeovers, demergers and bonus issues.

Dividend reinvestment plans and bonus shares

Shares you receive under a dividend reinvestment plan are treated as bought for the amount of the dividend used to acquire them, on the day they were issued, and the dividend is still declared as income. In the ATO’s example, a $360 dividend reinvested into 45 new shares gives those shares a cost base of $360. Bonus shares issued for nothing are handled by spreading the cost base of your original shares across the original and bonus shares, unless the bonus issue was taxed as a dividend, in which case the dividend amount becomes the cost base of the new shares.

Crypto assets

Crypto is a CGT asset, and the ATO treats each sale, gift, trade or swap of one coin for another, conversion to dollars, and purchase of goods with crypto as a CGT event. Your cost base is what you paid in Australian dollars, converted at the exchange rate on the day, plus the exchange and transaction fees on the purchase and the sale. When you swap one crypto asset for another, your capital proceeds are the market value of the asset you received, and that value becomes the cost base of the new asset. Keep a record of every transaction in dollars; exchanges close, and the ATO will not reconstruct your history for you.

Reduced Cost Base and Capital Losses

If your capital proceeds are less than your cost base, you do not simply flip the sign. You work out a capital loss using the reduced cost base, which has the same five elements as the cost base except the third. Instead of holding costs, the third element of the reduced cost base is any balancing adjustment amount for the asset. Holding costs can never help create a loss, which is why a holiday house sold at a loss cannot use ten years of rates and interest to make the loss bigger.

A capital loss can only be applied against capital gains, in the same year or carried forward without limit. It cannot reduce your salary or rental income. Our guide to capital losses explains the ordering and the carry forward rules.

Cost Base Adjustments

Your cost base is not fixed on the day you buy. It changes over the life of the asset, and a cost base adjustment is simply any event that adds to it or takes from it. The common ones are these.

• New costs. Each improvement, each legal cost defending your title and, for a holiday house, each year of holding costs adds to the cost base as you incur it.
• Capital works deductions. Each year’s claim on a rental comes off the cost base at sale, as set out above.
• Non assessable payments and recouped costs. A return of capital from a company or trust reduces the cost base of your units or shares, and any cost you later recoup, such as an insurance payout, is excluded.
• Market value substitution. If you paid nothing for an asset, or you and the seller were not dealing at arm’s length, such as a property transferred from a family member for less than it is worth, the first element of your cost base is the market value at the time you acquired it, and the seller is treated as having received market value.
• A change of use. A home first used to produce income after 20 August 1996 is treated as acquired at market value on that day, as explained in the property section.
• Indexation. If you acquired the asset before 21 September 1999 you may index the cost base for inflation up to 30 September 1999, using the consumer price index, instead of taking the discount. The third element cannot be indexed, and indexation cannot be used to make a loss. From 1 July 2027 indexation returns for everyone under the new rules below.

The 2027 Change: Indexation Replaces the 50% Discount

The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 is law, and the ATO confirms the CGT changes apply from 1 July 2027 and only to gains that accrue after that date. For anyone who owns an investment property, shares or crypto, the practical effect is that the cost base moves from important to decisive. Here is what changes.

The 50% discount ends for gains after 1 July 2027

For individuals, trusts and partnerships, the 50% discount stops applying to gains that accrue on or after 1 July 2027. It survives for gains that accrued before that date, and for two housing categories, new residential dwellings and affordable housing, that the Act carves out. The ATO describes the change as applying to individuals, trusts and partnerships; companies never had a discount.

Your cost base is indexed for inflation instead

In its place the Act adds indexation to the cost base of assets held for at least 12 months. Every element of your cost base except the third is uplifted by the consumer price index from the quarter you incurred the cost to the quarter you sold, so you are taxed only on the gain above inflation. Holding costs under element 3 are not indexed, which is one more reason to keep every receipt for the costs that are.

Indexed cost = cost × (CPI for the quarter of sale ÷ CPI for the quarter the cost was incurred)

A 30% minimum tax on the indexed gain

Australian resident individuals pay a minimum of 30% tax on the indexed capital gain. If your marginal rate is higher, you pay your marginal rate. If it would have been lower, extra tax is charged to bring the rate on the gain up to 30%. Indexation is also limited to periods when you were an Australian resident, not a foreign or temporary resident.

Assets you already own: the 1 July 2027 reset

If you hold an asset on 30 June 2027, the Act treats you as having sold it just before 1 July 2027 and bought it again just after, at its market value at that time. No tax is payable on that notional sale. Instead, the gain that accrued up to 30 June 2027 is set aside as a deferred gain, and when you eventually sell, that part is taxed under the old rules with the 50% discount, while the gain after 1 July 2027 is worked out from the market value cost base with indexation and the 30% minimum. You can choose an apportioning method instead of a market value, but for most assets a valuation at 30 June 2027 will be the document that protects the discount on the growth you have already earned. The Act applies the same reset to assets held by trusts, and a parallel rule to assets bought before 20 September 1985.

Records You Must Keep (and For How Long)

The ATO expects you to keep records of everything that affects your capital gains and losses: what happened, when it happened and who the parties were. For the cost base that means the documents behind every element.

• The contract of sale and the settlement statement when you bought, and the same when you sold
• Invoices and receipts for stamp duty, legal and conveyancing fees, valuations, agent commission and advertising
• Invoices, receipts and bank statements for every improvement, and council approvals for renovations
• For a holiday house or vacant land, the rates notices, land tax assessments, insurance premiums, loan interest statements and repair invoices for every year you owned it
• Depreciation schedules and tax returns showing the capital works deductions you claimed on a rental
• Broker contract notes, dividend reinvestment statements and exchange transaction histories for shares and crypto
• Valuations at the date of death for inherited assets, and at 30 June 2027 for assets you still hold on that date

Keep them for at least five years after the CGT event, and where a capital loss is carried forward, until the loss is fully used and the review period for that year has ended. You can keep an asset register instead of the original documents once the entries are certified, and then keep the originals for five years from certification. Without records the ATO can disallow the amount, but as the ATO itself says, it is never too late to keep records: solicitors, agents, brokers, councils and valuers can often reconstruct what you have lost.

Frequently Asked Questions

What is included in the cost base for CGT?

Five elements: what you paid for the asset, the incidental costs of buying and selling it such as stamp duty, legal fees, agent commission and brokerage, the costs of owning it where they were not deductible, capital improvements, and the costs of defending your title. Costs you claimed or could have claimed as a deduction, and capital works deductions on a rental, are excluded.

Is stamp duty part of the cost base?

Yes. Stamp duty is an incidental cost under element 2 for any asset acquired after 19 September 1985. So are transfer fees, legal and conveyancing fees, and title search fees.

Does the loan, or the interest on it, count towards the cost base?

The amount you borrowed never counts; the cost base measures what you paid for the asset, not how you paid for it. Interest counts only as a holding cost under element 3, which means only where it was not deductible, such as on a holiday house or vacant land bought after 20 August 1991. Interest on a rental property is deductible each year and stays out.

Do capital works deductions reduce the cost base?

Yes, for property acquired after 7:30 pm on 13 May 1997. Every dollar of capital works deductions you claimed, or could have claimed, comes off the cost base and the reduced cost base when you sell. Keep the depreciation schedule that shows the figure.

What is the difference between the cost base and the reduced cost base?

The cost base works out a capital gain. The reduced cost base works out a capital loss, and it swaps the third element, holding costs, for any balancing adjustment amount. Holding costs can reduce a gain but can never make or increase a loss.

What is a cost base adjustment?

Any event that changes the cost base after you acquire the asset: a new improvement, a year of holding costs on a holiday house, a capital works deduction claimed on a rental, a return of capital, an insurance recoupment, a change of use from home to rental, or indexation for an older asset.

What is the cost base of an inherited property?

If the deceased bought it before 20 September 1985, or it was their main residence and not producing income when they died and passed to you after 20 August 1996, your cost base is its market value on the day they died. Otherwise you inherit their cost base as it stood on that day. A main residence sold under a contract that settles within two years of the death is usually fully exempt.

What if I do not know my cost base?

Reconstruct it. Your solicitor or conveyancer holds the purchase contract and settlement statement, the state revenue office can confirm the stamp duty, your bank can reissue loan and interest statements, your agent has the sale documents, and a quantity surveyor can estimate construction costs. Where the purchase price is unknown or the asset was inherited, a registered valuer can provide a market value for the relevant date.

Is cost basis the same as cost base?

Cost basis is the American term for the same idea, and American articles describe American rules. In Australia the term is cost base, the rules are the five elements above, and the discount and indexation rules are Australian.

What is the six year rule for capital gains tax?

If you move out of your home and rent it out, you can keep treating it as your main residence for up to six years, and indefinitely if it is not rented, so long as you do not treat another property as your main residence for the same period. It is a main residence rule, not a cost base rule, and it sits alongside the market value rule for a home first used to produce income.

Is there a 7% sell rule or a simple trick for avoiding capital gains tax?

No. There is no 7% rule or trick in Australian tax law. The legitimate ways to pay less are the ones in this guide: a complete cost base with every element proved, the main residence exemption where it applies, the 50% discount for assets held over 12 months until 30 June 2027, capital losses applied against gains, and timing a sale into a year when your other income is lower.

How will the 2027 changes affect my cost base?

From 1 July 2027 the 50% discount ends for individuals and trusts, every element of the cost base except holding costs is indexed for inflation, and a 30% minimum rate applies to the indexed gain. Assets you already hold are treated as bought again at market value on 1 July 2027, with the earlier gain kept under the old rules. A complete cost base and a valuation at 30 June 2027 are what protect you.

Getting Your Cost Base Right

Your cost base is the sum of what you paid, the incidental costs of buying and selling, the holding costs you could not deduct, the improvements you made and the costs of defending your title, less the capital works deductions you claimed on a rental. Every element needs a document behind it. For property, the clawback and the holding costs rule decide most of the outcome; for inherited assets, the date the deceased bought it decides the starting point; for shares and crypto, the records decide whether the cost base can be proved at all. From 1 July 2027 the discount gives way to indexation and a minimum rate, and the value of your assets on 30 June 2027 becomes part of the calculation. Use the calculator above to see where your own figures land, and keep the records that let you stand behind them.

Disclaimer: This article provides general information only and is current as at September 2026. It does not constitute financial or tax advice. Figures, thresholds and rates are based on ATO information for the 2026-27 financial year and on the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, and may change. Your personal circumstances affect how these rules apply to you. Please consult a registered tax agent for advice specific to your situation.

About The Author: Artur Osadchiy

Artur is a Certified Practising Accountant with over 30 years’ experience working as a trusted advisor to 600+ clients across Australia. Based in Melbourne, he started Tax Window with his wife Marina in 2009 and leads the firm’s tax and accounting team. In his free time, Artur enjoys watching the AFL (go Kangas!) and spending time with family.

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