Property taxation is once again firmly in the national conversation, with the Treasurer signalling that negative gearing and CGT concessions may be reviewed as part of broader tax reform.
What’s Being Discussed?
While no formal legislation has been introduced, discussions have centred around:
- Limiting negative gearing benefits (particularly for future property purchases)
- Reducing the CGT discount (currently 50% for individuals)
- Targeting tax concessions that disproportionately benefit higher-income investors
The stated goal is to address:
- Wealth inequality
- Housing affordability pressures
- Long-term budget sustainability
What Is Negative Gearing and CGT?
- Negative gearing allows investors to offset property losses against other income
- CGT discount reduces taxable capital gains by 50% for assets held over 12 months
Together, these concessions have been key drivers of Australian property investment.
What Could Change?
While still speculative, potential reforms could include:
- Restricting negative gearing to new builds only
- Reducing the CGT discount (e.g. from 50% to a lower percentage)
- Applying changes only to future investments rather than existing holdings
Historically, major tax reforms include grandfathering provisions, but this is not guaranteed.
What Should Investors Do?
At this stage, there is no need for reactive decisions — but it’s a good time to:
- Review your investment strategy and timelines
- Understand your CGT exposure
- Ensure all property records (purchase costs, improvements, expenses) are up to date
- Avoid making rushed decisions based on speculation
Tax policy in property is politically sensitive and often evolves slowly — but staying informed is critical.
