Australian budget 2026 CGT implications

betterinvestmentthanshare said:
I’ll be a cash buyer looking to maximise my return with high rent.
Click to expand...
There’s your answer.

The CGT was brought in so the private market would build the houses and units that the government had failed to do.

Take away the CGT and rents must go up.

There may be a small increase in home ownership but the renters will be living 4 to a room.

This is the next business model. The government encourages it!
 
sammysilver said:
The CGT was brought in so the private market would build the houses and units that the government had failed to do.
Click to expand...

That's correct and the policy has failed as we have a housing shortage. Successive State governments have abrogated their responsibility to provide social housing relying on the private sector which has resulted in the mess we have now.

The target market for savvy investors is not new builds in the far flung outer suburbs nor is it new units in multi story inner city suburbs, it's established housing in suburbs that are in demand as family homes. These investors are not interested in yield, they're solely interested in capital gain and are in direct competition with those wanting to purchase a house to live in. The result is that competition is fierce and prices are inflated.

Take those investors out of that market and it cools prices allowing families and first-home buyers a chance to own a home in a suburb that is more appealing than a lowset brick box in a location with substandard liveability and hours from their place of employment.

It's a sound strategy. Whether it works as expected is yet to be seen.

sammysilver said:
Take away the CGT and rents must go up.
Click to expand...

No. Any gain made before July 1 2027 is still eligible for the 50% deduction. After that time future gains will be subject to the new law. It's not going to increase the costs of providing a rental for existing landlords, merely trim a little fat from their capital gain should they sell. The market will decide what is an appropriate rent, not the few areshole landlords using this as an excuse to scalp renters.

The abolition of NG would have more of an impact, but around half of landlords in the market don't negative gear anyway so there won't be any impact on them, of those that do they could try to raise rents but they'll be in competition with those that don't so that won't work, or they could refinance or more likely they'll have to sell into a market that will mostly be buyers looking for a place to live.

Concerns that this policy will create havoc in the housing market is just fear mongering by those with a vested self-interest under the current status quo.
 
Last edited:
mmm....shiney! said:
www.theguardian.com

Capital gains discounts were meant to usher in an Australia of ‘shareholders’ – not property speculators | Saul Eslake

Defenders of the Howard-era discount say ‘if you tax something more, you’ll get less of it’. But less investors in the housing market is a good thing
www.theguardian.com www.theguardian.com
Click to expand...
You’re missing a large part of investor strategy.
Leverage in the equity property market to build wealth which ordinary Australians have no other access to investing in other sectors.
New builds will still provide this for those that have already built a large property portfolio, they can sustain the lengthy process and outlay without a return that the majority can’t.
So where does that leave the most recent property investor and future investor without access to leverage.
Albo stated promised in a media conference that he won’t take Australians back time to how it used to be……well he has done just that with these changes, taken us back to the 1990’s…….another broken promise.
See, you can’t rely on this government to fix anything, their track record speaks for its self, the only way to get to where you to be is to rely on yourself and exploit every policy, loophole and idea you can come across. It’s the way of the system.
 
So where now will investors again access to leverage?
It’s still the property market
There is no way new builds can keep up with demand with all the immigrantion, the government is continuing to accept 185000 migrants in per year.
Property and rent will continue to rise, the only way for rent relief will be capital control, price capping, financial repression.
 
mmm....shiney! said:
Well the changes to CGT and negative gearing are a step in the right direction, hopefully it'll improve things for most of us.

I'm loving the meltdown from certain sectors of the community and media. :D
Click to expand...
I am planning to leave Australia in the next 3 years as I can see we are on then slippery slope to full bore socialism/communism.

Also capital gains tax is dumb. Most people first had to save money to buy the assets in the first place. They paid income tax on the income. If they spend that income then they don’t pay additional tax (other than GST). However if they use that income to buy assets then they have to pay capital gains tax when they sell. So it’s effectively double taxation for most people.
 
mmm....shiney! said:
The government's policy is an attempt to suck the air out of the housing market in an attempt to restore affordability and housing as a place to live, rather than a means for the wealthy to stick their hand out for freebies.
Click to expand...
If you want to make housing more affordable stop immigration (thereby reducing demand) and increase the supply of housing by cutting red tape (the government makes it impossible for people to build unless they are Meriton or Stockland etc) so it’s easy to build stuff. Crippling people with more taxes is a dumb way of doing it.
 
Bargain Hunter said:
If you want to make housing more affordable stop immigration (thereby reducing demand) and increase the supply of housing by cutting red tape (the government makes it impossible for people to build unless they are Meriton or Stockland etc) so it’s easy to build stuff. Crippling people with more taxes is a dumb way of doing it.
Click to expand...

I posted my view on immigration in the other thread: https://www.silverstackers.com/forums/threads/cgt-mooted-changes-and-other-stuff.112082/post-1304763
 
Last edited:
We have had consecutive bad economic managers running the country, it’s across the board on all levels, National, state and local and it gets worse and worse, each outdoing the previous. Politicians and bureaucrats are humans and just like you and me are motivated by money but these days they now have access to a whole lot more of it.
It’s now a career.
Who would of imagined 100 years ago that you could become very wealthy from the time you were born living off the state and not contributing to society.
Albo has done just that.
Born into government housing with a parent living on social benefits.
Public schooled
Free University education
Straight into politics
Become a PM
And he’s proud of it, he keeps letting us his life story
What an achievement
What a role model for all Australians
Again, government reflects the citizens they lead.
 

Im all for a fairer australia and giving everyone a fair go...
But at some point I think the arguement needs to be made:
Are the people doing the taxing better off, for each piecemeal adjustment to the policies, than the people being taxed?
 
So lets take real estate...

You have an investment property today...
Renovate the absolute shit out of it before July 1 2027 to get a HUGE overvaluation for reference.
Perhaps even sell it to your spouse at a huge profit. pay that at a lower tax rate today.
Then... gut the house and rent it...
Let it rent under valued for as long as it returns yield...
when you go to sell.. find out the inflation adjusted price and repair it up to threshold.
which... because of the overvaluation state of the price you have fixed in advance... means that for the most part.. your arent going to have a huge tax bill and can get an inflation adjusted gain on the overvalued relative increase from the july date...

i.e: the expensive houses o nthe market will sell at premiums to lock in discounted tax bills in advance...
investors will take that all too held off holiday to lower the income this year too...
hell.. the proceeds of mutual sales will probibly just be parked in offset accound on loans to keep lines of credit open.

i bet it will show in records of profit from stamp duty in the next year.
most likely also: private sales, mutual house swaps between in the know investors.

Nothing like overpaying for a house with 100kg of gold in fixtures and fittings to get it recorded high with todays discounts...

just calling it how i see it.
 
The CGT changes will have a massive effect on how generations plan to accumulate wealth that's for sure and no doubt there'll be carve outs.

But if the news is anything to go by the largest amount of noise in opposition to it is coming from the professional sectors with the most to lose ie fund managers, RE investment advisors, wealthy investors, start-up entrepreneurs looking to establish a business and then hopefully flip it to a corporate buyer ie 4Pines or Stone and Wood (shit beer bought by multinationals that have dozens of brands of shit beer already on the market), or coders designing software to streamline data collection for Woolies or Coles etc.

Speculating on the capital gain in asset classes only results in the concentration of wealth in the hands of those who are best positioned to take advantage of that either directly as an investor or as an investment advisor.

So @Azure, if you're wondering who is going to be better off, the wealthy will still have their assets albeit they are going to have to pay for the privilege of being able to leverage exponentially, households who can't buy into the RE market because investors have shut them out may be better off because they may get a better chance to own the home they live in, while younger Australians are going to have to think outside the box when it comes to planning their wealth accumulation strategies.
 
It's pretty obvious that the 50% CGT discount has done little to strengthen the Australian economy (the financial sector aside) since it's introduction.
 
You must log in or register to reply here.
Back
Top