Capital Gains Tax Discount Changes

There’s been a surge in headlines and commentary in recent weeks about a possible change to Australia’s capital gains tax (CGT) discount, including talk of reducing the discount from 50% to 25%.

If that happens, investors could pay tens of thousands more in tax when selling a property.

And that doesn’t just affect investors, it could impact rental supply/prices, property listings, and local market movement.

Here’s what we know right now and what it could mean for you.

What’s Being Discussed?

A Senate inquiry is currently reviewing how the CGT discount operates, with a report due in March 2026.

At the same time, potential tax changes are being discussed ahead of the May 2026 Federal Budget.

Important: No change has been confirmed. Right now, this is policy discussion, not law.

Quick Refresher: What Is Capital Gains Tax?

Capital Gains Tax is the tax paid on the profit made when selling an asset, such as an investment property.

If you make a gain, that amount is added to your income and taxed at your marginal rate.

Currently, if you hold an asset for more than 12 months, you receive a 50% discount on that gain.

Real Example: $1.3 Million Sale

Let’s say:

• Purchased for $800,000
• Sold for $1,300,000
• Capital gain = $500,000

Current 50% Discount

Taxable gain = $250,000
At 47% tax = $117,500

If Reduced to 25%

Taxable gain = $375,000
At 47% tax = $176,250

Difference: $58,750 more in tax

That’s the type of shift that can influence whether people sell, hold, or invest.

Will Rents Rise?

That’s the biggest question we’re hearing.

The argument from property groups is simple:

Lower returns = fewer investors = less rental supply = upward pressure on rents.

Others argue supply and construction rates are the dominant drivers.

What’s clear is that housing policy rarely affects just one group.

What should you do right now?

Given nothing is confirmed, the best move is to stay informed (and not make rushed decisions based on headlines alone).

Here’s what we recommend:

• Homeowners: Focus on your long-term plan; policy noise doesn’t change what a well-priced, well-presented home can achieve.
• Investors: If you’re considering selling in 2026, speak with your accountant about CGT scenarios and timelines, before making decisions.
• Renters: Watch the market closely and plan early for lease renewals, especially in areas with low vacancy.

Key Dates

• 17 March 2026: Senate report due
• May 2026: Federal Budget

Final Thoughts

Right now, this is discussion: not legislation.

But the detail matters. And if changes occur, they won’t just affect “investors”.

They’ll affect the entire property ecosystem.

It's best to be informed and we will update you when and if these changes come into effect. If you would like to speak to one of our agents more about how this may affect you. please reach out.

A quick note

This article is general information only and isn’t financial or tax advice. If you’re making a decision about selling, buying, or restructuring, please speak with a licensed tax professional.