What is the current CGT discount in Australia and how might it change by 2026?

Currently, many individuals receive a 50% CGT discount on assets held for more than 12 months, reducing the taxable gain by half. Treasury is modelling capital gains tax changes 2026 that would remove the CGT discount and apply a flat tax or inclusion rate instead. Precise rates, thresholds, and any grandfathering are not yet confirmed and would depend on legislation after the May budget process.

How could CGT discount removal affect negative gearing strategies?

CGT discount removal would lower the after‑tax payoff from capital gains, which reduces the appeal of borrowing to chase price growth. That can slow investor demand even without direct changes to loss offsets. If negative gearing reform later caps offsets or quarantines losses, leveraged strategies could face both weaker exit gains and higher ongoing after‑tax holding costs, making yield quality and cash flow more important.

What should property investors do now to prepare for potential reforms?

Start by modelling scenarios using higher effective CGT rates and longer holding periods. Recheck your cost base records, depreciation schedules, and cash buffers. Stress‑test rental yield assumptions, vacancy risk, and interest coverage. Avoid selling solely for tax reasons. Instead, align decisions with market conditions and your time horizon. Consider entity structures, but wait for legislative detail on capital gains tax changes 2026 before making irreversible moves.

Will owner‑occupied homes be affected by potential CGT reforms?

Under current rules, the main residence is generally exempt from CGT in Australia. Early reporting on capital gains tax changes 2026 focuses on the investor discount and does not indicate a change to this exemption. Still, policy is not final until enacted. Keep documents that prove your home’s main residence status and track any periods of rental use, which can create partial CGT exposure.

How might listed REITs and banks react if investor demand softens?

If capital gains tax changes 2026 dampen investor buying, developers and builders could see slower pre‑sales and settlements. REIT valuations are sensitive to cap rates, rent growth, and occupancy, so funding costs and leasing momentum matter. Banks may experience a shift toward owner‑occupier lending, with implications for margins and arrears. Focus on balance sheet strength, cash flow quality, and exposure to cyclical housing volumes.

Global Market Insights

Australia CGT Changes March 11: Discount Removal Would Hit Negative Gearing

ByHuzaifa Zahoor March 11, 2026March 11, 2026

Australia’s capital gains tax changes 2026 are moving into focus as Treasury models the removal of the current CGT discount in favour of a flat tax. Economists argue a higher CGT could cool leveraged property investing before any negative gearing reform. With measures flagged for the May budget, investors should stress‑test after‑tax returns, cash flows, and holding periods. We outline what is being considered, how it might interact with property incentives, and practical steps to prepare portfolios in Australia.