Member's Update:

Proposed Property Tax Changes - Overview for Investors

Dear Members,

Recent media coverage has raised discussion around potential changes to negative gearing and Capital Gains Tax (CGT). This update provides a general overview of current proposals and how they may relate to long-term property investors.

Negative Gearing

Negative gearing currently applies under existing tax settings for properties already held.

At this stage, no retrospective changes have been announced in relation to existing property holdings.

In many past tax reforms, governments have applied “grandfathering” provisions, where existing arrangements are preserved while changes apply to new investments. However, any such treatment would depend entirely on final legislation, should changes proceed.

Any future policy adjustments, if implemented, may apply to new property purchases and would be subject to government design and legislation.

For some retired investors, negative gearing may be less relevant depending on individual income levels and financial structure.

Capital Gains Tax (CGT)

The 50% CGT discount remains part of the current tax framework.

CGT is generally triggered upon the disposal of an asset, subject to individual circumstances.

In previous tax policy changes, grandfathering provisions have sometimes been used to protect existing assets from new rules; however, this cannot be assumed for any future proposals and would depend on final legislation.

Current policy discussions have not indicated specific targeting of long-term property holders or retirees, although future settings remain subject to change.

For investors primarily holding property for income rather than disposal, the immediate impact of CGT-related proposals may vary depending on individual circumstances.

Long-Term Property Investors

Many members have built long-term property portfolios over extended periods, in some cases involving multiple properties.

Over time, investors may have accumulated various tax deductions and positions, including depreciation and carried-forward losses, depending on individual circumstances.

As a result, the impact of policy changes can differ significantly between investors.

Summary

• No confirmed changes currently apply to existing properties
• No retrospective taxation has been announced
• Grandfathering provisions have historically been used in some policy changes, but are not guaranteed
• Policy proposals remain subject to change through legislation
• Impacts will vary depending on individual circumstances and portfolio structure

We will continue to monitor developments and keep members informed of relevant updates.

Warm regards,
The FIRM Team
Financial Independence & Retirement Management

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