Your cost base is the number you subtract from the sale proceeds to work out a capital gain. Get it right and you pay tax only on real growth; understate it — or fail to evidence it — and you can pay more than you need to. This guide walks through the five elements the law lets you include, builds a cost base step by step, and shows how the 1 July 2027 reset changes the base date, not what belongs in the calculation. General information only, not tax advice — confirm with your accountant.
Jump to the worked calculation
The 5 cost-base elements#
A cost base is built from five categories of cost. Not every property has all five, and some costs are excluded if you have already claimed them as a tax deduction — so read each element with your own history in mind.
What you paid to acquire the asset, plus the market value of any non-cash consideration you gave for it. For most homes and investment properties this is the purchase price.
The transaction costs of buying and later selling: stamp/transfer duty, conveyancing and legal fees, the buyer's or selling agent's commission, a valuer's or surveyor's fee, advertising, and search and settlement costs.
Costs of simply owning the asset — loan interest, council rates, land tax, insurance, and repairs and maintenance. Available generally for assets acquired after 20 August 1991, and only to the extent you have not claimed (and cannot claim) them as a tax deduction.
Capital expenditure that increases or preserves the asset's value — renovations, extensions, a new deck or driveway — where the improvement is still reflected in the property when you sell.
Capital expenditure to establish, preserve or defend your title to the asset or a right over it — for example, legal costs to resolve a boundary or ownership dispute.
The catch that trips people up is element 3. If your property was rented and you deducted the rates, interest and insurance each year in your tax return, those amounts cannot also sit in the cost base — that would be double-dipping. Element 3 usually matters for periods a property earned no income (for example, vacant land, or a home before it was ever let). Ask your accountant which of your holding costs qualify.
Build a cost base, step by step#
Here is an illustrative property, put together one element at a time. The dollar figures are illustrative round numbers, not a quote or a prediction.
| Element | Item (illustrative) | Amount |
|---|---|---|
| 1 — Acquisition | Purchase price | $600,000 |
| 2 — Incidental | Stamp duty $22,000 + conveyancing $2,000 + buyer’s agent $6,000 | $30,000 |
| 4 — Capital improvement | Kitchen and bathroom renovation (2022) | $80,000 |
| 3 — Ownership | Rates, insurance and interest for a 12-month vacant period, not deducted | $9,000 |
| 5 — Title preservation | Legal costs to defend a boundary claim | $3,000 |
| Total cost base | $722,000 |
If this property later sold for $1,000,000, the capital gain before any discount, indexation or the reset would be $1,000,000 − $722,000 = $278,000. Every extra dollar you can evidence in the cost base is a dollar of gain you are not taxed on — which is exactly why records matter (see the records checklist).
Try it with your own numbers:
Illustrative general information, not tax advice. Excludes buying/selling costs, the CGT discount calculation, indexation, exemptions and your marginal rate; SMSFs and companies are excluded from the reform for property acquired on or after 20 September 1985 (pre-CGT property is deemed sold whoever holds it). Confirm with your accountant.
A note on the reduced cost base#
When you make a capital loss rather than a gain, you use a reduced cost base instead. It is worked out the same way but excludes element 3 (ownership costs). You cannot use the cost base to create or increase a loss with holding costs — a common misunderstanding. Your accountant will apply whichever base produces the correct result.
How the 1 July 2027 reset fits in#
The reform does not rewrite the five elements — it changes the base date.
Under the reset, an asset you still hold on 30 June 2027 is treated as reacquired at its market value at the end of 30 June 2027 — just before 1 July. In cost-base terms, that market value becomes your new element 1 — the starting point for gains after that date. Costs you incur after 1 July 2027 (further improvements, selling costs, and so on) keep adding to the base through elements 2 to 5, exactly as before. Growth up to 1 July 2027 stays under the old 50% discount rules; growth after it is measured from the reset value under CPI indexation plus a 30% minimum tax rate on that gain.
So there are really two questions to get right:
- What is your cost base built from? The five elements above — unchanged.
- What is your 1 July 2027 value? This is where evidence choices bite.
Two ways to set your 1 July 2027 value#
Setting a valuation as at the end of 30 June 2027 is elective. You can rely on the Treasurer’s free apportionment formula, or you can hold a dated, independent valuation — a choice with genuine evidence trade-offs, not an obligation.
- The Treasurer’s free apportioning method compounds one constant growth rate across the time you held the property. It is simple and costs nothing, and where growth was even it lands close to reality. Where your property outperformed the average, it can place more gain in the post-2027 period than actually occurred.
- A dated, independent valuation measures your property’s actual market value on 1 July 2027 and is prepared to be ATO-acceptable. Capturing that value while the evidence is fresh is usually easier and more defensible than reconstructing it years later.
The homepage sets out the mechanics of the reset in full, and the worked examples show, in dollars, when each method wins.
Where to go next#
- Keep the paper trail for every element — the CGT cost base records checklist.
- See the reset’s tax impact in three scenarios — the worked examples.
- Ready to secure dated, defensibility-first evidence? On-site (full inspection) from $690 — the level to use where the ATO may test your cost base. A desktop is fixed at $299 (unit) / $349 (house), complex properties from $399, but it is not inspected, so it suits monitoring rather than a CGT figure. (A 1 July 2027 valuation done later is retrospective, quoted separately.) Reserve at CGT Valuation Ready, an independent valuation service.
- Accountants working across a client book can access wholesale volume pricing and batch submission at the Valuation Ready partner portal.
Register interest#
We use your details to prepare your valuation and to contact you about it. If you engage us, we also create and keep a long-term record of the property's documents and condition as at 30 June 2027, so that you, your accountant, or a valuer you appoint can use it when the property is eventually sold; and we keep property information after your personal details are removed, to improve our valuation reference data. See our privacy policy; you can ask us to delete your details at any time.
Common questions#
What are the 5 elements of a CGT cost base?
Is stamp duty part of the cost base?
Can I include loan interest and council rates in my cost base?
Do renovations increase my cost base?
Does the 1 July 2027 reset change what I can include in the cost base?
Do I have to get a valuation for 1 July 2027?
General information only — not tax, financial or legal advice. Dollar figures are illustrative. Any indicative appraisal is automated and is not a certified or ATO-suitable valuation; the signed valuation is provided separately.