There is no single right answer to whether you sell an investment property before retiring, but there is a right way to decide. For some owners, selling converts an illiquid, management-heavy asset into money that can live in super’s tax-free pension phase. For others, the rental income and grandfathered tax treatment make holding the better play. And from 1 July 2027, new capital gains tax rules change the maths for everyone weighing it up.
This guide covers the new CGT and negative gearing laws, the sale timing that saved one of our podcast case study couples $87,000, how proceeds can move into super, and what a property does to your Age Pension either way.
The new CGT and negative gearing rules (now law)
The 2026-27 Federal Budget changes to capital gains tax and negative gearing passed Parliament on 25 June 2026 and are now law. If you are weighing up a property sale in the next few years, these are the headlines:
The 50% CGT discount ends on 30 June 2027. From 1 July 2027, capital gains for individuals, trusts and partnerships are calculated by indexing the cost base for inflation instead, with a minimum 30% tax rate applying to the real gain. In plain terms: instead of halving the gain, you subtract the inflation component and pay tax on what is left, at no less than 30% for most people.
Gains you have already built up are protected. The new rules apply to gains accruing on and after 1 July 2027. For a property held before that date and sold after it, the 50% discount treatment is preserved for the gain accrued up to 30 June 2027, with the new rules applying only to growth after that. So there is no need to panic-sell purely to beat the deadline. The decades of growth already in your property keep their current treatment.
Retirees get a carve-out from the minimum tax. The legislation includes an exemption from the 30% minimum tax for income support recipients, including Age Pensioners. For many retirees on low taxable incomes, gains will continue to be taxed at marginal rates on the indexed amount, which can land well below 30%.
Negative gearing narrows to new builds. From 1 July 2027, rental losses on established residential properties bought after 7:30pm on 12 May 2026 can no longer offset wages or other income. Properties held before Budget night are grandfathered and can keep negative gearing under the old rules until they are sold. Source: Australian Government Budget 2026-27, tax reform. Current as at October 2026. Some implementation details, including how gains are apportioned across the changeover date, were still under Treasury consultation at the time of writing, so the fine print may firm up further.
The practical takeaway: if you already hold an investment property, the grandfathering means holding costs you nothing extra. But the timing of a future sale now carries more moving parts than it did a year ago, which makes the next section matter even more.
The tax timing that saved a client $87,000
Phil and Dan walked through a real case study on the podcast episode about how the Age Pension really works, and it remains the clearest example of why the year you sell matters as much as the decision to sell. As Phil put it on the episode: “Like everything our government does, navigating super, the Age Pension, retirement, all that stuff’s a complex bloody minefield.” Here is how the couple in the case study navigated it.
The couple were in their final working year, one earning $150,000 and the other $95,000, each with under $500,000 in super, and ready to sell an investment property. Three versions of the same sale:
Selling in the last working year: the capital gain stacked on top of two full salaries, and the CGT bill came to around $98,000.
Delaying settlement to the first retirement year: with salaries gone, the same gain landed in much lower tax brackets, and the bill dropped to around $73,000. Same property, same price, $25,000 less tax from timing alone.
Adding catch-up contributions on top: because both partners had total super balances under $500,000, they could use unused concessional cap amounts from the previous five years to make large deductible contributions in the sale year, offsetting much of the gain. The CGT bill fell to around $11,000.
Please note: All figures, examples and scenarios in this article are approximate and for illustrative purposes only. Individual outcomes depend on personal circumstances, income, asset values and current tax and government policy. This is general information, not personal advice, and specific tax questions belong with your accountant.
From $98,000 to $11,000 is an $87,000 difference on an identical sale, driven entirely by the year it settled and what happened with the proceeds. The new CGT rules from 2027 do not change that principle. CGT is still added to your taxable income in the year of sale, so a sale that lands in a low-income retirement year is still taxed far more gently than one stacked on top of a salary, and for Age Pensioners the new minimum tax does not apply at all. If anything, timing now does more work, not less.
What the property does to your Age Pension
We generally find the Age Pension impact surprises people more than the tax does. An investment property is fully assessable under the assets test, and the rental income counts under the income test. The family home is exempt. The investment property never is.
The numbers, current as at October 2026: a homeowner couple can hold $499,000 in assessable assets before the pension starts reducing, and it cuts out entirely at $1,121,000. For a single homeowner, the thresholds are $333,000 and $745,750. The pension reduces by $3 a fortnight for every $1,000 above the lower threshold. Source: Services Australia assets test. These figures are set by the Australian Government and are typically updated each March and September.
A $700,000 investment property on its own can wipe out most or all of a couple’s pension entitlement. Selling does not make the money invisible, because the proceeds become financial assets subject to the same assets test plus deeming (assumed income at 1.75% and 3.75% from 20 September 2026). But proceeds moved into a spouse’s super accumulation account, spent on the family home or restructured into exempt or lower-assessed forms can shift the entitlement meaningfully. This is the structural work our pension and Centrelink advice service deals with every week.
The case for keeping it
Selling is not automatically the right answer. Reasons clients keep investment property into retirement:
The income is real. A debt-free property yielding $25,000 a year net is a genuine income stream, and some retirees value rent arriving monthly more than they value liquidity.
Grandfathered tax treatment. A property held before 12 May 2026 keeps its negative gearing treatment until sold, and the gain accrued to 30 June 2027 keeps its discount treatment whenever the sale happens.
Legacy plans. Some owners intend the property to pass to children, which changes the whole analysis and brings estate planning into the picture.
The trade-offs are liquidity, land tax, tenants, maintenance and the pension impact above. You cannot sell a bedroom to pay for a hip replacement. For retirees who want property exposure without the management, we covered listed alternatives in Should I keep investing after retirement?
Curious what the proceeds could do inside super? Run your numbers through the free Wealthlab super calculator to see how a boosted balance changes the retirement picture.
Frequently asked questions
Do retirees pay CGT when selling an investment property? Yes. There is no CGT exemption for retirees. What changes is the rate, because CGT is added to your taxable income in the year of sale, and retirees drawing tax-free super income after 60 often sit in low brackets. From 1 July 2027, an exemption from the new 30% minimum tax applies to income support recipients, including Age Pensioners.
Should I sell my investment property before 1 July 2027? Not necessarily. Gains accrued before 1 July 2027 keep the 50% discount treatment even if the property is sold later, so the deadline alone is not a reason to sell. Whether selling suits your situation depends on income needs, the pension position and your tax year. Worth modelling with your accountant and adviser rather than rushing.
Can I put the sale proceeds into super? Generally yes, within the caps: $32,500 concessional and $130,000 non-concessional for 2026-27, with carry-forward and bring-forward rules potentially allowing much more. The downsizer contribution does not apply to investment properties, only to a home you have lived in.
How does an investment property affect the Age Pension? It counts in full under the assets test and its rental income counts under the income test. Many couples holding an investment property receive little or no pension as a result. Selling converts it into financial assets that are deemed, which can improve or worsen the position depending on structure.
What happened to negative gearing? From 1 July 2027, negative gearing against wages is limited to new builds. Established properties bought after 7:30pm on 12 May 2026 can only offset losses against rental income or carry them forward. Properties held before that date are grandfathered until sold.
Is it better to sell before or after retiring? It depends mostly on taxable income in the year of sale. Selling in a low-income retirement year rather than a final working year saved the couple in our podcast case study around $25,000, before catch-up contributions took the total saving to $87,000. Individual circumstances vary, so this is one to model properly.
Your next step
Deciding whether to sell an investment property before retiring is one of the most consequential financial decisions many Australians face, because the tax, pension and super pieces are all connected and the timing drives the outcome. Your situation may be different from any example here, which is exactly why the general framework above is a starting point rather than an answer.
If any of this has raised questions about your own situation, book a free chat with the Wealthlab team. No pressure, no jargon,or take the free Wealthlab retirement quiz
