CGT indexation vs the 50% discount: the new-home exemption explained

The 2026 Budget replaces the 50% CGT discount with inflation-adjusted indexation and a minimum 30% tax rate on realised gains — for almost all assets, almost all of the time. The carve-out is for new homes, which retain optionality between the old discount and the new indexation method.

That optionality is the policy detail no one outside the advisory community is fully pricing in. Hera models both paths for every client transaction.

In low-inflation, long-hold scenarios, the 50% discount almost always beats indexation. In high-inflation or short-hold scenarios, indexation can produce a more favourable outcome — especially where the asset throws off material depreciation in the early years.

Because new homes preserve the choice, investors get to pick whichever method delivers the lower tax liability at sale. Every other asset class loses this optionality.