Dan White, Managing Director of Ray White Group, and the group’s Chief Economist, Nerida Conisbee, have called on the Australian government in an open letter to refrain from making any changes to the capital gains tax discount.
This appeal comes amid reports that the federal government is considering options to reduce the discount as part of discussions for the upcoming May budget, although no final decision has been confirmed.
Under current laws, property investors who hold their assets for 12 months or more are granted a 50% discount on capital gains tax when selling their properties. This means that only half of the net profit is added to their taxable income.
However, this policy has sparked widespread debate in the context of Australia’s housing affordability crisis. While some argue that the discount supports the availability of rental housing, others see it as an excessive advantage for investors.
At the same time, national home prices continue to rise significantly, with the median house price recording an annual increase of 9.1% to reach $897,000 as of last February. Mr. White acknowledged that improving home ownership accessibility is undoubtedly a major challenge, but he warned of the consequences of any policies that could place additional pressure on the rental sector.
White stated, “There is a real housing affordability problem, particularly for first-time buyers. However, focusing solely on imposing further restrictions on investors will increase the burden on renting households, which have already experienced sharp rent increases in recent years.”
In their open letter, White and Conisbee explained that any reduction or removal of the current capital gains tax discount could decrease the number of rental properties available, leading to higher rents and a slowdown in new housing construction. Ultimately, this would exacerbate the country’s housing crisis.
