Seven in ten investors will hold or never sell if capital gains tax discount is cut, poll finds
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Exclusive Momentum Media polling suggests tinkering with the CGT discount won’t unlock housing supply โ it will lock it up. Meanwhile, insider whispers point to a May budget announcement without grandfathering protection for existing investors.
Asurvey of property investors across the Momentum Media network โ which reaches millions of readers in professional services, finance, and real estate โ has found that a super-majority of Australians with investment properties will either not change their strategy at all or actively hold longer if the federal government reduces or removes the capital gains tax discount.
The polling, conducted by Agile Market Intelligence across the Smart Property Investment audience and broader Momentum Media readership, asked investors directly: if the government changes the capital gains tax discount โ whether halving it, removing it entirely, or introducing a new rate โ what would you do? The results paint a picture of a property market that could become significantly less liquid if Canberra proceeds with changes.
You’re just making a less liquid property market. The second, third, fourth, fifth order impacts of that might not be realised immediately โ but when they are, the impact will be significant. โ Phil Tarrant, Property Buzz
The stamp duty trap
One of the most underappreciated knock-on effects of reduced property transaction volumes is the impact on state government revenues. Stamp duty โ collected every time a property changes hands โ is a primary funding mechanism for state budgets. Fewer sales means less stamp duty, which means state governments face a growing hole in their finances at precisely the moment they are expanding their bureaucratic commitments.
With 77% of investors signalling they will transact less frequently under a revised CGT regime, that volume reduction could translate directly into materially lower stamp duty receipts across every state. “If state governments are generating half the money they used to through stamp duty, mate โ that’s a crisis,” said Property Buzz co-host Phil Tarrant.
Will it be grandfathered? Don’t count on it
The question of whether any changes will apply only to new property purchases โ so-called “grandfathering” โ is the key variable investors are watching ahead of the May federal budget. The conventional wisdom has been that grandfathering existing holdings is the politically safe option. But there is a compelling counter-argument: if the government needs to increase tax receipts immediately, grandfathering defeats the purpose.
How does capital gains tax work in practice? An investor buys a property, holds it for a period, then pays tax on the gain when they sell. If new rules only apply to properties purchased after the budget, the government would need to wait years โ potentially a decade โ before seeing any meaningful increase in CGT revenue. Only by applying the changes to all investors, including those with existing holdings, can Canberra generate money from day one.
“The argument why there’s a good chance the government may not grandfather this is because if they need money today, that’s the only way they can do it,” said Tarrant, who noted he will be in Canberra for the budget announcement.
Senior government figure reportedly buying investment properties before May
In a claim that has been circulating among buyer’s agents in recent days, Tarrant revealed an anecdotal account from one agent whose client โ described as senior within the government ecosystem and with significant visibility into budget planning โ had been briefed to secure investment properties unconditionally before the May budget.
Tarrant was careful to caveat the claim. “I don’t want to be a peddler of misinformation โ so I’m just tempering this. But that was the brief.” The implication, if accurate, would suggest those with the most inside knowledge are acting on the expectation that the changes, when they come, will apply broadly and without protection for existing investors.
New builds vs existing stock: a possible middle ground
One scenario Tarrant is watching is the possibility that the government differentiates between new property and existing property when restructuring CGT rules โ effectively incentivising investors to put capital into new construction rather than competing for established dwellings. This would align with the government’s stated goal of addressing housing supply, though critics would note that the construction industry is simultaneously facing record insolvencies and rising material costs that make new builds increasingly unviable regardless of tax incentives.
Why does Labor have to go after ALL assets like Shares, Crypto, Gold & Silver? This is just a money grab to affect ALL assets, not just property. This isn’t fair, because those people investing in speculative assets like Shares, Crypto, Gold & Silver, won’t have any “guarantee” of profit in potentially 5 to 10 years, due to the nature of the risk of the markets, while property investors would get guaranteed value increases year after year, yet ALL gains on ALL assets will be taxed now at up to 47%. IF YOU ARE LUCKY to profit on the Share Market/Crypto/Gold&Silver, being taxed 47% is HUGE and makes it not worth the risk anymore. The Government is just after money, this has nothing to do with increasing housing, but will just decrease housing, as well as all investment in businesses in Australia. No one will sell their properties to be slugged with a 47% Capital Gain Tax. That is nearly half of all profit! If anyone would sell a house, they will never be able to buy another one for the same price, they will have to downsize always, because the tax will be too large to buy a property of equal value. All investors will be downsizing, meaning they will never sell, but only rent out their properties.