CGT Reform Could Spook Investors and Push Rents Higher

Proposed capital gains tax changes could reduce the current 50% CGT discount for investment properties or replace it with an inflation-based calculation, potentially increasing tax bills by tens of thousands of dollars in high-growth suburbs. Principal homes remain exempt. Grandfathering existing holdings would likely discourage selling, while a short transition window could trigger a rush to buy before new rules apply.Negative gearing changes are seen as more disruptive. Investment properties often cost more to hold than they earn in rent, with losses currently offset against taxable income. Removing or limiting that benefit could push some landlords out, reduce rental supply, and drive rents higher, as occurred after negative gearing was restricted in the mid-1980s. A possible compromise could cap benefits to one or two investment properties.Family transfers may still trigger stamp duty and must reflect market value, making legal and accounting advice essential.