Australia’s housing affordability challenges continue to dominate national conversation, and as the federal government looks ahead to the next budget, capital gains tax (CGT) reform is back on the table.
According to recent reporting by the ABC, the government is considering whether existing CGT settings — particularly the CGT discount — are contributing to housing pressures, and whether changes could form part of a broader housing solution. While no decisions have been made, it’s a conversation worth paying attention to.
A quick refresher: What is capital gains tax?
Capital gains tax applies when you sell an asset for more than you paid for it. This includes assets such as shares, businesses and investment properties.
Under current rules:
- If you hold an asset for more than 12 months, you may be eligible for a 50% CGT discount.
- This means only half of the capital gain is added to your taxable income.
- Your principal place of residence (family home) remains exempt from CGT.
These rules have been in place for many years and are a key consideration in long-term investment planning.
Why is CGT being reviewed now?
Housing affordability has become increasingly strained, particularly for first-home buyers. One concern raised by economists and policy groups is that tax concessions for investors may unintentionally give them a competitive advantage when purchasing property, especially at entry-level price points.
The government is exploring whether:
- CGT discounts are influencing investor behaviour,
- tax settings are impacting housing accessibility, and
- changes could support broader housing objectives without destabilising the market.
Importantly, this review sits alongside other housing discussions — including supply, planning and infrastructure — rather than being viewed as a standalone fix.
What changes are being discussed?
While nothing is locked in, options under consideration include:
- Reducing the CGT discount for future investments
- Maintaining the family home exemption, which the government has stated is not under threat
- Grandfathering existing investments, meaning any changes would likely apply only to assets acquired after a certain date
These ideas are still being debated and would require extensive consultation before becoming policy.
What this means for you
If you’re an investor, this is a reminder that tax rules can change, and investment decisions should always be made with a long-term strategy in mind — not based solely on current concessions. While CGT is an important factor, it should sit within a broader framework that considers cash flow, risk, diversification and long-term goals.
If you’re considering entering the property market, particularly as a first-home buyer, any future reduction in tax advantages for investors may slightly ease competition in some segments. That said, housing affordability is influenced by many factors, and no single policy change will solve it on its own.
For existing investors, the key message is don’t panic. Historically, major tax reforms are phased in, and there is strong expectation that existing assets would not be retrospectively affected. Now is simply a good time to review your position, understand your exposure, and ensure your strategy remains fit for purpose.
The bottom line
CGT reform is not a done deal — but it is clearly part of the government’s broader housing and tax policy conversation ahead of the next federal budget. Whether changes eventuate or not, this is a timely reminder of the importance of flexible, forward-looking financial planning.
If you’d like to understand how potential tax changes could affect your personal situation or investment strategy, speaking with a trusted adviser early can help you make informed decisions — regardless of where policy ultimately lands.
Source: ABC News, February 2026