Details of the federal government’s changes to capital gains tax (CGT) and negative gearing have been leaked to Phil Coorey at The AFR.
Below is a summary of what we know.
Negative gearing changes apply only to properties acquired after budget night.
The Albanese government will restrict negative gearing to newly built properties only, but with a long transition to avoid a rush of investors into existing homes.
Existing negatively geared properties will be fully grandfathered.
Existing properties bought after budget night can remain negatively geared until 1 July 2027, after which they lose eligibility.
New‑builds purchased after budget night can be negatively geared without limit on the number of properties.
These rules mirror those that were taken to the 2016 and 2019 federal elections.
CGT discount changes also apply only to assets acquired after budget night
The 50% CGT discount will be replaced with the pre‑1999 indexation model, but only after a transition period.
Assets bought after budget night will keep the 50% discount until 1 July 2027. After that, they will switch to inflation‑indexed CGT.
New‑build homes will be exempt from the CGT change. Investors will be permitted to choose either the 50% discount or the inflation‑indexed model.
Assets held before budget night will receive a blended discount based on the time held under each regime.
In principle, I have no objection to the changes. However, any budget savings should be directed towards lowering income tax rates.
Otherwise, it is just another tax grab to fund the federal government’s spending largesse.
