Theyincludesignificantproposedchangestohow CapitalGainsTax,orCGT,appliestoqualifying investments,includingproperty
HeadofResearch,MathewTiller,saidprivate“mumand dad”investorsstillprovidemostoftherentalhousing acrossAustralia,soanypolicychangethatreduces investoractivityneedstobeconsideredcarefully “TheFederalBudgetmarksthebiggestchangeto property-relatedtaxpolicyinageneration,”hesaid “Thatmattersbecausethemarketisalreadybeing pulledintwodifferentdirectionsConditionsaresofter thantheywereayearago,borrowingcapacityhasbeen reducedbyhigherinterestrates,butrentalmarkets remaintight,andhousingsupplyisstillconstrained “Anychangethataffectsinvestorconfidencehasthe potentialtoflowthroughtorentalsupply,particularlyin marketswherevacancyratesarealreadylow”
Underthecurrentsystem,investorswhoholdan investmentpropertyformorethan12monthsgenerally receivea50percentCGTdiscountThismeansonlyhalf ofthecapitalgainisgenerallyincludedintaxableincome whenthepropertyissold
Foraninvestmentproperty,thecapitalgainisgenerally thedifferencebetweenthesalepriceandtheoriginal purchaseprice,afterallowingforeligiblecostsand adjustments
TheBudgetproposestoreplacethecurrentsystemwith acost-basedindexationmodelfrom1July2027In simpleterms,thismeanstheoriginalpurchasecostmay beadjustedforinflation,sotaxismorefocusedonthe realgainratherthanthefullincreaseintheasset’svalue overtimeTheproposedframeworkalsoincludesa minimum30percenttaxoncapitalgains Forinvestorspurchasingqualifyingnewlybuilthomes, post-Budgetguidanceindicatestheymaybeableto choosebetweenthecurrent50percentCGTdiscount frameworkandthenewindexedapproachThisis
