CGT Reform: What It Means for Your Property Investment Strategy

With ongoing discussion around Capital Gains Tax (CGT) discount reform, we’ve analysed how different CGT discount scenarios (50% / 25% / 0%) interact with property growth rates (3% / 5% / 7%) to affect after-tax returns over 5, 10, and 20-year holding periods.

Key findings

Growth rate matters most. At 7% annual growth, property investment with a 50% CGT discount outperforms unleveraged stocks and ETFs by 2-3x over 10+ years, even if the discount is reduced to 25%.

Leverage advantage. The power of leveraged property investment (80% LVR) significantly amplifies returns compared to unleveraged equity investments, especially over longer holding periods.

CGT impact varies by growth. At 3% growth, complete removal of the CGT discount reduces 20-year profit by 12%. At 7% growth, the same policy change reduces profit by 23%, nearly double the impact.

Strategic timing. Properties held for 20 years at 7% growth generate roughly $838k profit under a 50% CGT discount, making location selection and long-term holding crucial for wealth building.

With the right property selection and a long-term strategy, investors can maximise the leverage advantage highlighted in this analysis, even as CGT settings evolve.

This analysis is for informational purposes only and does not constitute financial or tax advice. Please consult with qualified professionals before making investment decisions.