Investors are losing some of their discounts in a major overhaul of the tax system.
Under the current rules, Australians can take advantage of a 50 per cent capital gains tax discount if they hold an asset for more than 12 months.
A capital gain is the profit made from selling assets, such as investment properties, shares, crypto or even collectible items, such as artwork.
This discount was designed to encourage investment. However, critics argue the measure, combined with negative gearing, has skewed home ownership away from owner-occupiers and towards property investors.
The 50 per cent discount will be replaced by a discount based on inflation.
Investors will always pay at least 30 per cent tax on gains under a new minimum rate designed to avoid people holding on to assets until years when their income is low.
Pensioners and people on income support will be exempt from the 30 per cent minimum rate.
The new reforms will only apply to gains made after July 1, 2027, with any made before that date still qualifying for the 50 per cent discount.
To encourage investment in new housing, investors who purchase new builds can choose from the 50 per cent CGT discount or the new settings when they sell their properties.
The new rules will also partially end an exemption for assets purchased before 1985.
Those Australians sitting on decades-old assets must now pay tax on gains made after July 1, 2027, using the new inflation rules.
Combined with changes to negative gearing, this measure is estimated to raise $3.6 billion over five years from 2025–26, and is expected to help 75,000 Australians buy their own home over the next decade.
