Why It Matters

A correctly calculated cost base can substantially reduce your CGT liability.

When you sell an investment property in Australia, the capital gain (or loss) is the sale price minus the cost base. The cost base includes the original purchase price plus stamp duty, legal fees, and any capital improvements, less any Division 43 capital allowances previously claimed during ownership.

Getting this calculation wrong is expensive. Overstating the cost base exposes you to ATO scrutiny. Understating it means paying CGT you don't owe. A QS-prepared CGT estimate report itemises every component of the cost base, applies the correct method, and gives your accountant defensible figures to take into your tax return.

MCG holds the original construction cost data, depreciation history, and capital improvement records for thousands of investment properties, which means we can prepare CGT reports even when client documentation is incomplete.

Quick Reference
When you need a CGT estimate report

Selling an investment property: Yes, in nearly all cases.

Selling your principal place of residence: Generally not (main residence exemption applies).

Inherited property used to produce income: Yes, the cost base needs reconstructing.

Property converted from PPOR to investment: Yes, cost base resets at conversion.

SMSF property disposal: Yes, separate calculation rules apply.

Two Calculation Methods

50% discount vs indexation method

Australia's CGT regime offers two calculation methods depending on when the asset was acquired. For pre-1999 assets you can choose whichever gives the lower CGT outcome.

Method A

50% Discount Method

For assets acquired on or after 21 September 1999

The most commonly applied method for modern property investors. After establishing the capital gain, individuals and trusts can apply a 50% discount, halving the assessable amount that flows into income tax. SMSFs receive a 33 1/3% discount.

  • EligibilityAsset acquired 21 Sep 1999 or later, and held for at least 12 months by an individual, trust, or SMSF.
  • Discount rate50% for individuals and trusts. 33 1/3% for SMSFs. 0% for companies.
  • Cost basePurchase price + acquisition costs + capital improvements, less Division 43 deductions claimed.
  • When to useDefault for any asset acquired after Sep 1999. Required for that vintage.
Method B

Indexation Method

For assets acquired before 21 September 1999

An alternative for older assets. The cost base is indexed to CPI changes between the acquisition date and 30 September 1999, increasing the cost base in line with inflation. There's no discount applied. For pre-1999 assets you can choose between this method and the 50% discount method, whichever results in lower CGT.

  • EligibilityAsset acquired before 21 Sep 1999. Indexation frozen at the 30 Sep 1999 CPI value.
  • How it worksEach cost base component (purchase price, costs) is multiplied by the CPI ratio from acquisition to 30 Sep 1999.
  • No discountIndexation effectively replaces the 50% discount. Applying both is not allowed.
  • When to useFor pre-1999 assets, run both calculations and choose whichever gives the lower CGT.
What's Included

Inside an MCG CGT estimate report

Six components every report contains, designed to give your accountant defensible figures to lodge.

Cost base reconstruction
Original purchase price, stamp duty, conveyancing, capital improvements, and any incidental costs all itemised and verified.
Depreciation reconciliation
Every Division 43 deduction claimed during ownership tallied and subtracted from the cost base, with year-by-year breakdown.
Both methods calculated
For pre-1999 assets, both 50% discount and indexation calculations shown side by side so you can choose the lower-tax outcome.
CPI indexation tables
Where indexation applies, the relevant CPI series is applied to each cost base component and shown transparently.
Registered tax agent sign-off
Prepared and reviewed by a registered tax agent (TPB), making the report admissible for ATO and accountant lodgement purposes.
Estimate range, not point figure
Where reasonable assumptions are required (e.g. apportioning improvements), the report shows a defensible range with the rationale for each figure.
How It Works

From enquiry to delivered report in 4 steps

A standard MCG CGT report engagement, end to end.

Send property details
Acquisition date, purchase price, sale or proposed disposal details. Plus any depreciation schedule and improvement records you have.
Cost base reconstruction
MCG itemises every component of the cost base, draws on its depreciation database where needed, and applies appropriate methodology.
CGT calculation
Both methods calculated where eligible. Discount rate applied based on entity type. Net assessable capital gain shown clearly.
Lodge with your tax return
Report delivered to you and your accountant. Used in the year of disposal. The report fee is itself tax deductible.
Mike Mortlock, Co-Founder and Managing Director of MCG Quantity Surveyors
Reviewed by

Mike Mortlock

Co-Founder and Managing Director, MCG Quantity Surveyors

Mike Mortlock is a registered tax agent and the co-founder of MCG Quantity Surveyors. He sits on the AIQS Advisory Board and the PIPA Board, and is a regular commentator on property tax matters in the Australian Financial Review. MCG has prepared CGT estimate reports for thousands of Australian property investors across all states and territories.

Registered Tax Agent (TPB) AIQS Advisory Board PIPA Board
Last reviewed: 26 April 2026 · Specialism: capital gains tax estimates, depreciation, property tax
FAQ

Common questions on CGT estimate reports

The questions property investors and accountants ask MCG most often when preparing for a property disposal.

A capital gains tax (CGT) estimate report is a document prepared by a quantity surveyor that calculates your estimated CGT liability when you sell or otherwise dispose of an investment asset (typically property). It establishes the cost base, accounts for prior depreciation deductions, and applies the relevant calculation method (50% discount or indexation) to estimate the assessable capital gain. Your accountant uses this when preparing your tax return for the year of disposal.
The 50% discount method applies to assets acquired on or after 21 September 1999 and held for at least 12 months by an individual or trust. It allows 50% of the capital gain to be treated as tax-free. The indexation method applies to assets acquired before 21 September 1999, where the cost base is indexed to CPI up to 30 September 1999. For pre-1999 assets you can choose whichever method gives the lower CGT outcome.
Yes, in nearly all cases. Without a properly calculated cost base, you risk overpaying CGT. The cost base includes the original purchase price plus stamp duty, legal fees, and any capital improvements, less any depreciation deductions previously claimed. A QS-prepared CGT report ensures every component of the cost base is correctly itemised.
No, generally not. Australian principal places of residence are exempt from CGT under the main residence exemption, provided certain conditions are met (you've lived there, haven't claimed it for income, etc.). CGT reports are typically needed for investment properties, second homes used to produce income, and inherited property where the deceased was using it for income.
Division 43 capital allowances claimed during ownership reduce the cost base of the property at sale, which increases the assessable capital gain. This is sometimes called 'recapture'. A properly prepared CGT report tracks every Division 43 deduction taken and adjusts the cost base accordingly. Division 40 plant and equipment write-offs are generally treated separately. See our tax depreciation page for the original deduction framework.
Standard turnaround is 1 to 2 weeks from receipt of all documentation. The timeline depends on the complexity of the cost base and how much of the original purchase and improvement documentation is available. We can often work from limited records by drawing on our depreciation database and historical valuation methodology.
Ideally: original purchase contract and settlement statement, stamp duty receipt, conveyancing fees invoice, any capital improvement records (renovations, extensions), the depreciation schedule used during ownership (if any), and the sale contract or proposed disposal details. We can work with less if needed; the cost base can be reconstructed by a registered QS.
Talk To An Expert

Get your CGT calculation right at sale

Talk to an MCG CGT specialist on 1300 795 170. Registered tax agents and quantity surveyors, working across Australia.

Request A Quote 1300 795 170
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