Change Is Coming: What It Means for Property Owners
My online news and social media feeds have been full of humour and sarcasm around this week's budget. I've seen commentary around the “Robin Hood” style wealth redistribution, and the government trying to solve housing affordability while also raising taxes and spending heavily.
The proposed Capital Gains Tax (CGT) is one of the biggest talking points for investors and property owners.
Currently,
if you own an investment property or asset for more than 12 months, you receive a 50% CGT discount. This means only half of the profit is taxed when you sell.
For example:
- Buy for $800,000
- Sell for $1,200,000
- Profit = $400,000
- Under current rules, only $200,000 is added to your taxable income.
What is changing from 1 July 2027?
The Government has proposed removing the 50% CGT discount from 1 July 2027 and replacing it with an inflation-indexed system.
In simple terms, instead of automatically receiving a 50% discount, your gain would only be reduced by inflation, meaning investors could pay significantly more tax when selling assets.
The changes are proposed to apply mainly to: investment properties, shares, trusts, and other investment assets.
Family homes (principal place of residence) are expected to remain exempt.
The Government says the changes are designed to reduce speculative investing, improve housing affordability, and redirect investment toward new housing supply.
However, critics argue that investors may leave the market, fewer rentals may be built, and housing supply could tighten further.
One of the biggest concerns from accountants and investors is that these reforms could fundamentally change how Australians build long-term wealth through property and investment.
So, should you sell your property before 1 July 2027?
Whether it’s to maximise the gain on your investment now or to avoid tightened buyer demand once the changes are in effect, this is the time to consider your next step. Call us for a confidential discussion, with no strings attached.