When to Sell: How to Time Your Investment Property Sale for the Best After-Tax Outcome

15/12/2025

When to Sell: How to Time Your Investment Property Sale for the Best After-Tax Outcome

How to time your property sale for the strongest financial outcome.

Understanding when to sell can be worth tens of thousands of dollars. A smart investor doesn’t just sell based on market conditions they sell based on market timing, tax timing & personal income to achieve the best after-tax result.

Selling an investment property isn’t just about getting a great price, it’s also about choosing the right time to sell for the best after- tax outcome. The timing of your sale can dramatically affect how much Capital Gains Tax (CGT) you pay, whether you qualify for key tax concessions, and how much profit you ultimately keep.

A smart investor doesn’t just sell based on market conditions but based on tax advantage timing together with market timing to achieve the best after-tax result.

Why Timing Matters in Investment Property Tax Planning

Property values, rental returns and interest rates all move in cycles, and so do your personal tax circumstances. CGT isn’t a fixed amount; it depends on:

  • Your marginal income tax bracket
  • How long you’ve owned the property
  • Whether the property was ever your main residence
  • How much depreciation you’ve claimed
  • Whether the 50% CGT discount applies

This means timing your sale strategically can significantly reduce your taxable gain and increase your after-tax profit.

The 12-Month Rule: Qualifying for the 50% CGT Discount

One of the most important timing rules for Australian property owners is the 12-month ownership requirement.

If you own an investment property for more than 12 months, you generally qualify for the 50% CGT discount. Sell even a day earlier and you lose the discount entirely.

Selling in a Lower-Income Year Can Reduce Tax

CGT is applied at your marginal tax rate, so the year you choose to sell matters.

Many investors choose to sell in a year when they expect their income to be:

  • Lower due to fewer working hours
  • Affected by long service leave, parental leave or extended leave
  • Reduced after partial retirement
  • Offset by carried-forward capital losses

Example:

If you earn $180,000 this year but expect $95,000 next year, selling in the lower-income year could reduce your tax bill by $15,000–$30,000 depending on the size of the gain.

Even a short delay, like waiting until 1 July may save thousands.

Renovations: When They Help and When They Backfire

Renovations can change the cost base of your investment property, affecting your CGT.

If you sell too soon after renovating:

You may not benefit from depreciation or capital works deductions.

If you hold longer:

  • Renovations add to your cost base, reducing your gain.
  • but depreciation you’ve claimed may reduce the cost base, increasing the gain.

This is why your renovation timeline + sale timeline must be strategically aligned.

Why June 30 Matters: EOFY Tax Planning

The difference between selling on 29 June and 1 July can be dramatic.

Selling before 30 June:

  • Gain is added to the current year’s taxable income
  • May push you into a higher tax bracket
  • Fewer deductions left to offset the gain

Selling after 30 June:

  • CGT event moves into the next financial year
  • Gives you a full year to prepare
  • Helpful if your income will be lower next year

Sometimes waiting even a few weeks can lower your CGT bill significantly.

Offset Gains by Realising Capital Losses

If you have losing investments like shares or crypto, you can sell them to realise a capital loss in the same financial year as your property sale.

Capital losses can:

  • Offset capital gains dollar for dollar
  • Be carried forward indefinitely

This is one of the most effective CGT-reducing tools for investors.

Contract Date vs Settlement Date: The ATO Rule Many Investors Miss

One of the most misunderstood CGT rules is when the taxable event occurs.

The ATO counts the contract date not settlement date as the CGT event.

This means:

  • If you sign the contract on 29 June, it counts in that financial year.
  • Even if settlement is months later.
  • To push the gain into the next tax year, you must sign after 1 July.

This timing detail can make or break your tax strategy.

Common Mistakes That Increase CGT (and How to Avoid Them)

  • Selling in a high-income year
  • Breaking the 12-month rule accidentally
  • Triggering the CGT event on the wrong side of 30 June
  • Missing the 6-Year Rule window
  • Forgetting depreciation reduces your cost base
  • Not reviewing renovation timing
  • Ignoring capital losses
  • Not planning early enough

Avoiding these mistakes can save you thousands.

Don’t Sell Before Running the Numbers

Before selling an investment property, run a full CGT forecast that considers:

  • Your current income
  • Your income expectations next year
  • Length of ownership
  • Depreciation claimed
  • Renovations completed
  • Eligibility for exemptions
  • Available capital losses

A well-timed sale can create more profit than the difference between multiple buyer offers.

If you're planning to sell in 2026 or want to model the tax impact of timing your sale, the team at Cashflow Financial can help you forecast, plan and structure your sale for the strongest after-tax outcome. Contact the team today. We are here to help.