Applying Capital Gains Tax to our homes won't change things much

February 16, 2026

In discussions I too have often proposed that giving home buyers the same tax settings as property investors would negate the leveraging advantage investors have that lets them bid higher. Except with Capital Gains Tax (CGT).

Extending that idea to taxing Capital Gains on the sale of one’s private residence, as suggested by the authors here, ignores one very important cause of the current market failure in providing housing. That factor is the lack of new housing.

The ALP proposal during their 2019 election campaign was to limit CGT tax discounts to new builds. That was the most sensible policy in a policy agenda that included many good policies. It solved two problems in one go.

It discouraged investors from using their other tax advantages to outbid home buyers for existing properties where they wouldn’t get the CGT advantage upon sale and, secondly, they’d then be more likely to put investment dollars into new builds where capital gains would be taxed less.

Unfortunately, the fact that election turned into a loss of one or two seats instead of a gain of one or two saw the ALP throw their babies out and keep the dirty bathwater they were aiming to replace.