In family law property settlements, Capital Gains Tax (CGT) can become a major point of dispute — especially when one party wants to deduct future tax from the value of assets like investment properties, particularly if one party retains a non-CGT asset and the other retains a CGT asset.

But the law doesn’t automatically allow CGT to be taken into account. So, when does it apply?

When dividing property after separation, the Court works out the value of the total asset pool. Sometimes, one party will argue that the value of a property should be reduced to account for CGT they may need to pay in future — often when the property is an investment or likely to be sold.

However, the Court will only allow this if the CGT liability is clear, real, and likely to happen soon.

In the recent case of Marlin & Henson [2025], the husband wanted to deduct over $3 million in potential CGT from the asset pool. He said the properties were investments and would be sold in the future.

But the Court disagreed.

Why?

• He hadn’t listed or marketed the properties for sale.
• He didn’t name any specific property he planned to sell.
• He actually opposed any court-ordered sale at the time.

The Court decided the CGT wasn’t certain or immediate enough to count — and refused to deduct it.

The key takeaway from Rosati & Rosati (a leading case on CGT) and Marlin & Henson is CGT will only be deducted from the asset pool if a sale is clearly going to happen soon, not just because a property was bought as an investment.

Even if CGT isn’t deducted upfront, the Court can still take it into account when deciding how to fairly divide the property overall, but this is discretionary and up to the Judge.

If you want CGT to be considered:

• Be ready with evidence — like sales plans, listing documents, or proof of intention.
• Understand that saying a property will be sold isn’t enough.
• Get legal and tax advice early in the process.

This can have a big impact on how assets are valued and ultimately divided.

Contact our team if you would like specific advice about your matter and CGT. We’re here to help navigate the legal and financial side of separation.