Australia’s peak real estate body says CGT changes will ‘disrupt and damage’ housing market
The Real Estate Institute of Australia warned that proposed capital gains tax (CGT) and negative gearing reforms will worsen housing shortages and reduce GDP, while tax experts and accounting bodies criticized the rushed legislative process and increased complexity. The Albanese government defended the changes, arguing they will make the tax system fairer and improve housing affordability, though critics say the reforms risk unintended economic consequences.
Australia’s Real Estate Institute of Australia (REIA) has condemned proposed changes to the capital gains tax (CGT) discount and negative gearing, arguing the reforms will disrupt investor behavior and deepen housing supply shortages. President Jacob Caine told a Senate inquiry that the changes—introduced to parliament on the last sitting day in May—will raise rents, lower GDP, and reduce full-time construction jobs by nearly 4,000. The REIA called for a holistic review of housing tax policies across federal, state, and local governments, stating the current bills ‘do not pass’ on increasing housing supply. Wilson Asset Management chair Geoff Wilson echoed concerns, stating the reforms undermine Australia’s ‘social contract’ of hard work and risk-taking leading to prosperity. Tax experts also raised alarms, with the Institute of Public Accountants’ Tony Greco accusing the government of abandoning proper consultation, which he said risks unintended outcomes and legal disputes. Tax academic Miranda Stewart suggested the small business CGT exemptions are overly generous and urged further scrutiny, though she dismissed claims the reforms would drive businesses to New Zealand due to its zero CGT. From July 1, 2027, the 50% CGT discount will be phased out, replaced by an inflation-based concession and a minimum 30% tax on gains. The government introduced these reforms in the May budget, framing them as necessary to improve fairness and affordability. However, critics argue the rushed implementation and lack of consultation will create confusion and economic drag. The Australian Council of Social Service (ACOSS) defended the changes, with acting chief executive Edwina MacDonald stating they will make the tax system fairer and boost housing stability. She noted that under current rules, investors pay lower tax rates on property gains compared to workers, such as a care worker earning $70,000. The debate continues as the Senate inquiry examines the reforms’ potential impacts on housing, investment, and economic growth.
This content was automatically generated and/or translated by AI. It may contain inaccuracies. Please refer to the original sources for verification.