What is the capital gains tax discount and what might change?

Australia currently provides a 50% capital gains tax discount for individuals on assets held 12 months or more, and a one third discount for super funds. The government is weighing a CGT discount cut, potentially to 33% or 25%, possibly focused on investment property. Final design, timing, and any grandfathering are not yet confirmed.

How could a CGT discount cut affect property investors?

A lower discount increases the tax on realised gains, which can reduce after tax returns on investment property. Demand for established homes could ease, while build to rent or new construction might look relatively more attractive if settings differ. Investors should retest cash flow, timing of sales, and long term hold assumptions.

What does grandfathering mean in this context?

Grandfathering would allow existing assets to keep current capital gains tax rules, while new purchases face the reduced discount. If used, the start date could be budget night or a later commencement. Without grandfathering, a single date could apply to all gains. Investors should wait for the final dates and examples.

What should investors do before the May budget Australia?

Build scenarios for 50%, 33%, and 25% discounts. Confirm 12 month holding periods, available capital losses, and your tax bracket. Review asset location across personal, trust, and super. Prepare documentation on cost bases and ownership dates. Avoid rushing sales, and be ready to act once start dates and grandfathering rules are confirmed.

Global Market Insights

Australia CGT Discount Cuts February 04: Greens Support, Libs Oppose

ByDanny Kontos February 4, 2026February 4, 2026

Canberra is weighing a capital gains tax discount cut in the May budget Australia, with the Greens in support and Liberals opposed. Options include trimming the 50% discount to 33% or 25%, possibly focused on investment property. Any change would lower after tax returns, shift capital between housing and equities, and influence housing affordability. Investors should watch for possible grandfathering and start dates. Extra revenue could fund larger income tax cuts. We break down what this could mean and how to prepare with clear, practical steps.