What is Loan-to-Value Ratio (LVR)?

LVR (Loan-to-Value Ratio) is the percentage of a property's value that you are borrowing. For example, if you buy a $750,000 property and borrow $600,000, your LVR is 80%. Most Australian lenders require an LVR of 80% or below to avoid Lenders Mortgage Insurance (LMI). The lower your LVR, the more equity you hold from day one.

What LVR do I need to avoid Lenders Mortgage Insurance (LMI)?

Most Australian lenders require an LVR of 80% or lower to avoid Lenders Mortgage Insurance (LMI). At 80% LVR you are contributing at least 20% as a deposit. Lenders can go up to 95% LVR but LMI premiums rise sharply above 80%, adding thousands to your borrowing costs.

How is property equity calculated?

Property equity is the difference between your property's current market value and the outstanding balance of your mortgage. If your property is worth $900,000 and you owe $500,000, your equity is $400,000. Equity grows as your property value rises and as you pay down your loan. An independent property valuation gives you an accurate figure to base equity calculations on.

How much deposit do I need to buy a house in Australia?

To borrow at an 80% LVR (avoiding LMI), you need a 20% deposit plus purchase costs such as stamp duty and legal fees. On a $750,000 property that's $150,000 plus costs. Some buyers can access loans up to 95% LVR requiring only a 5% deposit, but LMI will apply. Use the LVR & Deposit Calculator above to work out your numbers.

What is the CGT 50% discount on investment property in Australia?

Under current Australian tax law, individuals and trusts that hold an asset for more than 12 months receive a 50% discount on their capital gain before it is added to their assessable income. If you make a $300,000 capital gain on an investment property, only $150,000 is taxable. This discount has applied since September 1999. It is available to individuals and trusts; complying super funds receive a one-third discount and companies receive none.

How does CGT cost base indexation work from 1 July 2027?

For gains accruing on or after 1 July 2027, the cost base is adjusted by the increase in the Consumer Price Index (CPI) before the gain is worked out, so only the real gain above inflation is taxed. For property bought on or after 1 July 2027 the indexation runs from the purchase date. For property already held, the gain is split: the 50% discount applies to the gain up to the property's market value immediately before 1 July 2027, and indexation applies from that value onward. Individuals pay at least 30% on the post-1 July 2027 gain, unless they receive income support.

What is the 6-year absence rule for CGT on property in Australia?

Under ATO Tax Ruling TR 2015/1, if you move out of your main residence and rent it out, you can continue to treat it as your main residence for up to 6 years per absence period. If you sell within that 6-year window the property may be fully exempt from CGT. Any period beyond 6 years is proportionally subject to CGT, calculated over your total ownership period. Only one main residence can be nominated at a time.

Is the CGT indexation reform currently law in Australia?

Yes. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 is law, and the changes apply to gains accruing from 1 July 2027 — nothing changes for a sale before that date. From 1 July 2027 the 50% CGT discount is replaced by CPI cost base indexation for resident individuals, trusts and partnerships, with a 30% minimum tax for individuals on those gains (income support recipients exempt). Property held before 1 July 2027 keeps the 50% discount on the gain accrued up to its market value immediately before 1 July 2027, worked out from a valuation or the Government's apportionment method. New residential dwellings and affordable housing can choose to stay under the current rules. The main residence exemption is unchanged. This calculator is for indicative purposes only. Always consult a registered tax agent.

Property Calculators

Tools to help you make
better property decisions

Calculate your borrowing power and LVR — and estimate how the CGT reform taking effect on 1 July 2027 may affect your investment property.

LVR & deposit calculator

Max purchase price tool

CGT indexation estimator

CGT reform: law, from 1 July 2027

Borrowing power & equity

LVR, Deposit & Equity Calculator

Enter any two fields to calculate the third.

Your deposit ($)

How much you can contribute

LVR (%)

Lender's loan-to-value ratio

Property value ($)

Purchase price or valuation

Pair this with a Desktop Valuation or Full Valuation for an accurate property value before you approach your lender.

LVR & equity explained

What is LVR?

LVR (Loan-to-Value Ratio) is the share of a property's value you are borrowing. A $600,000 loan on a $750,000 property = 80% LVR. Most Australian lenders require 80% LVR or less to avoid LMI premiums.

What is property equity?

Equity = current market value minus your outstanding loan balance. As your property value rises and your loan reduces, equity grows — and can be released for renovations, a new purchase, or investment.

Why lenders need valuations

Lenders calculate LVR against a formal valuation, not just the purchase price. A professional property valuation confirms true market value and protects you from over-borrowing against an inflated figure.

CGT reform is now law — it applies to gains accruing from 1 July 2027
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 replaces the 50% CGT discount for resident individuals, trusts and partnerships with CPI cost base indexation on gains accruing on or after 1 July 2027, plus a 30% minimum tax for individuals on those gains. Nothing changes for a sale before 1 July 2027. For property you already own, the gain is split at 1 July 2027: the 50% discount still applies to the gain up to the property's market value immediately before 1 July 2027, and the new rules apply to the gain after it. That value comes from a market valuation or the Government's apportionment method (still being finalised). New residential dwellings and affordable housing can choose to stay under the current rules. The main residence exemption is unchanged. This calculator is for indicative purposes only. Always consult a registered tax agent.

Legislated reform — from 1 July 2027

CGT Indexation Estimator

Estimate your Capital Gains Tax under the new rules — the 50% discount up to 1 July 2027 and CPI indexation after it — against what the old 50% discount alone would have produced, including the 6-year absence rule.

Capital Gains Tax — Before and After 1 July 2027

Enter your property details to see how the 1 July 2027 split affects your tax.

1Property type

Established property
Gain split at 1 July 2027 — 50% discount before, CPI indexation after

New residential dwelling / affordable housing
You can choose to keep the current 50% discount rules

2Purchase details

Month and year of purchase

Contract date. Assets bought before 20 Sep 1985 (pre-CGT) are not covered here.

Purchase price ($)

Original cost base

Acquisition costs ($)

Stamp duty, legal fees, etc.

Market value immediately before 1 July 2027 ($) (optional)

From a valuation as at 30 June 2027. Leave blank and the calculator estimates it by assuming steady compound growth from purchase to sale — similar in concept to the Government's apportionment method, which has not yet been finalised. Not needed for property bought on or after 1 July 2027 or sold before it.

3Sale details

Month and year of sale

Contract date — the date the CGT event happens.

Expected sale price ($)

Your marginal tax rate

Lowest bracket: 16% to 30 June 2026, 15% in 2026–27, 14% from 1 July 2027. Medicare levy excluded.

Pensioner / income support recipient — exempt from the 30% minimum tax

4Main residence & absence rule

Never my main residence (investment property throughout)

Was my main residence, then I moved out

Year you last lived in the property

The year you moved out and stopped using it as your main residence.

6-year absence rule: If you moved out and rented the property, you can treat it as your main residence for up to 6 years per absence period (ATO Tax Ruling TR 2015/1). Years beyond 6 are subject to CGT, pro-rated over your total ownership period.

Your estimated CGT

—

Years owned

—

Exempt years

—

Taxable years

—

CPI indexation factor

50% discount on the whole gain

Total cost base	—
Sale price	—
Capital gain	—
50% discount applied	—
Taxable portion (after exemption)	—
Estimated tax payable	—

New rules — split at 1 July 2027

Total cost base	—
Value at 1 July 2027	—
Gain to 1 July 2027, discounted	—
CPI-indexed cost base	—
Gain after 1 July 2027	—
Taxable portion (after exemption)	—
Estimated tax payable	—

Need a CGT valuation report?

The split at 1 July 2027 turns on the property's market value immediately before that date. A hovr valuation can be prepared as at 30 June 2027 once that date has passed — the ATO does not accept a value for a future date — or as at any earlier CGT date, such as when you first rented the property.

Order a Dated Valuation

Methodology: Based on the ATO's published summary of the Treasury Laws Amendment (Tax Reform No. 1) Act 2026. For property held across 1 July 2027 the gain is split at the market value immediately before 1 July 2027: the 50% discount applies to the earlier part (taxed at your marginal rate) and CPI indexation applies to the later part, which is taxed at the higher of your marginal rate and 30% (income support recipients exempt). Where you leave the 1 July 2027 value blank it is estimated by assuming one constant compound growth rate from purchase to sale. CPI values are approximate annual averages based on ABS All Groups CPI data, interpolated by month, and projected at 2.5% a year beyond published data. The discount and indexation both require at least 12 months' ownership. The 6-year absence rule (ATO Tax Ruling TR 2015/1) is applied pro rata to both parts of the gain. The calculator does not net a loss on one part against a gain on the other, and does not account for capital improvements, other cost base elements, the Medicare levy or pre-CGT assets. Not financial or tax advice.

Understanding CGT on Investment Property in Australia

A guide to the rules before and after 1 July 2027, and how a professional valuation fits in.

Before 1 July 2027: 50% discount

Introduced in September 1999, the 50% CGT discount applies when an individual or trust holds an asset for at least 12 months — only half the capital gain is added to assessable income. It continues for any sale before 1 July 2027, and for property held on that date it still applies to the gain accrued up to the property's value immediately before 1 July 2027. New residential dwellings and affordable housing can choose to keep it for the whole gain.

From 1 July 2027: CPI indexation

Now law: gains accruing from 1 July 2027 are worked out by indexing the cost base for inflation (CPI), so only the real gain is taxed — and individuals pay at least 30% on it (pensioners and income support recipients are exempt). For property already held, the cost base for this part is the value immediately before 1 July 2027. Property bought on or after 1 July 2027 is wholly under the new rules.

The 6-year absence rule

If you lived in a property as your main residence then moved out and rented it, you can continue to treat it as your main residence for up to 6 years per absence period (ATO Tax Ruling TR 2015/1). Selling within those 6 years can make the property fully CGT-exempt. Any period beyond 6 years is taxable on a pro-rata basis over total ownership. Only one main residence can be nominated at a time. The reform does not change the main residence exemption.

Why you need a dated valuation for CGT

For property held on 1 July 2027 you will need its market value immediately before that date — from a valuation or the Government's apportionment method — when you eventually sell. Your accountant may also need a value at a change-of-use date. The ATO expects a valuation to be objective and supported by evidence. A hovr Desktop Valuation can be prepared as at a past date, setting out the comparable evidence behind the figure.

Tools to help you makebetter property decisions