Real estate agent fees are not typically deductible as an annual operating expense. Instead, they are added to the cost base of the property, which reduces the total taxable capital gain when the property is sold. This effectively lowers the amount of Capital Gains Tax (CGT) payable upon divestment.
Investors across Melbourne’s eastern suburbs and the peninsula regions are increasingly reviewing their portfolios to manage cumulative tax increases. The decision to sell often hinges on how to best offset selling costs against capital gains to preserve net returns.
Strategies to minimise Capital Gains Tax
Vendors can reduce their effective tax rate by selling in a low-income year, such as during retirement or maternity leave (ATO research, April 2026). Joint owners can split the gain, with each person reporting 50% of the gain at their own marginal rate (ATO research, April 2026). Existing capital losses on other assets can also be used to offset the gain.
The cumulative impact of Victoria’s 2026 taxes
Victoria currently holds Australia’s heaviest property tax burden, leading to increased supply in investment-heavy submarkets. This pressure stems from land tax rises, VRLT expansion, the congestion levy, and the Short Stay Levy (CoreLogic/Cotality, April 2026). Consequently, net rental yields for inner-city investors have been materially compressed (Forge Property, February 2026).
Inner-Melbourne congestion levy zones
The congestion levy applies to off-street car parking in designated zones, including Boroondara and Stonnington. For 2026, Category 1 rates are $3,030 and Category 2 rates are $2,150 (SRO Victoria, April 2026). The Category 2 zone expanded on 1 January 2026 to include South Yarra, Windsor, Richmond, and Cremorne.
The timing risk
A common point of confusion is the difference between the contract date and the settlement date. The CGT event is triggered by the signing of the contract, not the settlement. Deferring settlement to a new financial year does not change the tax year in which the gain is reported.
Frequently asked questions
How does the Short Stay Levy work for 2026?
The levy applies to bookings via platforms like Airbnb and Stayz. Hosts earning below $75,000 annually must lodge and pay by 30 January 2026. Those earning above $75,000 are subject to quarterly lodgements, which commenced on 30 April 2025 (SRO Victoria, April 2026).
What is the land tax adjustment threshold for 2026?
The 2026 land tax adjustment prohibition threshold is $10.7 million. For any sale contracts below this amount, sellers cannot require buyers to contribute to land tax at settlement; the seller must absorb the land tax costs up to the settlement date (SRO Victoria, April 2026).
How can joint owners reduce their tax on a sale?
Joint owners can split the capital gain between them. Each owner reports 50% of the gain on their own tax return, meaning the gain is taxed at their individual marginal rates rather than a single combined rate (ATO research, April 2026).
What are the congestion levy rates for 2026?
The levy affects owners of apartment buildings with separately titled car parks or short-stay accommodation in inner Melbourne. Rates for 2026 are $3,030 for Category 1 zones and $2,150 for Category 2 zones (SRO Victoria, April 2026).
Questions to ask your agent
- Based on current divestment trends in the eastern suburbs, is there an increase in owner-occupier demand for investment-grade stock?
- How does the current supply of investment properties in this specific corridor affect our pricing strategy?
- Can you provide comparable sale data for properties that have settled since the January 2026 congestion levy expansion?
This article contains general market information based on data current as at April 2026. It does not constitute financial, legal, or real estate advice specific to your property or circumstances. For an appraisal and tailored advice, speak with a Fletchers agent in your area.