{"id":903061,"date":"2026-09-23T23:34:12","date_gmt":"2026-09-23T23:34:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/903061\/"},"modified":"2026-09-23T23:34:12","modified_gmt":"2026-09-23T23:34:12","slug":"property-investors-may-pay-less-capital-gains-tax-under-labors-reforms-analysis-suggests-housing","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/903061\/","title":{"rendered":"Property investors may pay less capital gains tax under Labor\u2019s reforms, analysis suggests | Housing"},"content":{"rendered":"

Most property investors may end up paying less capital gains tax after Labor\u2019s budget reforms<\/a>, research based on an analysis of historical data suggests.<\/p>\n

The e61 Institute\u2019s analysis also found half of all landlords would not have faced higher costs from the loss of negative gearing over the period 2008 to 2025 if the new system had been in place, suggesting the tax reforms alone cannot explain a slump in investment demand.<\/p>\n

Under the changes, 53% of housing investors would have paid more tax in total in that period, while 43% would have paid less, according to the research.<\/p>\n

Dr Nick Garvin, a co-author of the paper, said public debate since the May budget had overstated how much the reforms would cost landlords.<\/p>\n

\u201cThe effect on investors is probably not nearly as bad as what\u2019s being made out,\u201d Garvin said.<\/p>\n

\u201cIf you\u2019ve got 50-50 chance of being better off or worse off, it\u2019s probably not going to affect your decision.\u201d<\/p>\n

A graph showing the share of property investors paying or, same and less tax under the new system<\/a><\/p>\n

New investor loan applications fell 28% in two months<\/a> at the Commonwealth Bank after the budget\u2019s release and July data shows growth in investor credit has slowed.<\/p>\n

The Reserve Bank governor, Michele Bullock, said on Tuesday the budget reforms had \u201cvery directly\u201d affected the market.<\/p>\n

\u201c[Applications] have really dropped a long way for investors,\u201d Bullock said. \u201cIt has changed the dynamic for investors, whether it\u2019s worth them investing in housing or not.\u201d<\/p>\n

The e61 research implied the reforms would only slightly add to investment costs, suggesting a much smaller impact on investment decisions than has occurred in reality.<\/p>\n

Rising interest rates have also added to costs this year, with another hike expected on Tuesday.<\/p>\n

Garvin said some market commentary may have misjudged the impact of the reforms on investor activity because it overestimated investor profits on house sales.<\/p>\n

The median home analysed in the paper earned an average annual capital gain of 3.3%, after accounting for sales costs. Garvin\u2019s sample included nearly 921,000 homes, a significant share of all investment properties bought and sold in the period.<\/p>\n

Inflation averaged roughly 3% annually from 2008 to 2025, implying a tenth of the median capital gain would be taxable under the new system. Half of the gain would have been taxed under the old system\u2019s flat discount.<\/p>\n

\u201cIt is possible that a rational investor would see the reforms as beneficial,\u201d Garvin said.<\/p>\n

Investors would likely pay more tax under the new system if they borrowed heavily to finance their purchase and invested in properties that rose rapidly in price or had little other income, such as retirees.<\/p>\n

The treasurer, Jim Chalmers, declined to directly comment on the paper but a Treasury spokesperson linked the findings to similar conclusions in the May budget.<\/p>\n

\u201cThe previous arrangements overcompensated some investors while undercompensating others and we are fixing that with a fairer and more neutral system,\u201d the spokesperson said.<\/p>\n

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\"JimJim Chalmers on why Labor didn\u2019t scrap negative gearing completely in budget \u2013 video<\/p>\n

The Liberal shadow treasurer, Tim Wilson, said the budget\u2019s \u201ccruel twist\u201d was that higher investor costs would be passed on as higher rents.<\/p>\n

\u201cHigher taxes will change investor behaviour leading to less housing available for rent and fewer homes being built,\u201d Wilson said.<\/p>\n

But Garvin said investors could continue to buy and rent out homes if they prioritised long-term capital gains over short-term cashflow, which had been supported by negative gearing.<\/p>\n

About half of all investments are typically negatively geared, running at a rental loss that can be claimed on annual income tax, and most would have paid slightly more tax if the government\u2019s reforms had been in place.<\/p>\n

Negative gearing will now only be available for newly built homes, though owners of existing property can still carry forward and claim rental losses on their eventual capital gains tax bill when they sell.<\/p>\n

Garvin said part of the post-budget drop reflected that some borrowers had needed negative gearing to afford an investment property.<\/p>\n

But the strength of the reaction to the budget suggested investors may not have understood they can still claim losses, leading to \u201cirrational\u201d emphasis on the lost annual tax refund, he said.<\/p>\n

Dr Peter Tulip, chief economist at the Centre for Independent Studies, said investors would not be \u201cnaive or short-sighted\u201d about negative gearing and come to focus on capital gains.<\/p>\n

He said e61\u2019s paper demonstrated that risk-averse investors would find property more attractive, as low gains would now be taxed less and high gains taxed more, making returns more predictable.<\/p>\n

\u201cOverall, housing is a safer investment than it used to be,\u201d Tulip said.<\/p>\n","protected":false},"excerpt":{"rendered":"Most property investors may end up paying less capital gains tax after Labor\u2019s budget reforms, research based on…\n","protected":false},"author":2,"featured_media":903062,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[64,63,99],"class_list":["post-903061","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-au","tag-australia","tag-business"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/903061","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=903061"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/903061\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/903062"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=903061"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=903061"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=903061"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}