Everyone is talking about selling, but you might want to think about buying.
If you have been following the proposed capital gains tax changes to the CGT discount, you have probably arrived at the same conclusion most investors have: get out before the rules shift. It is a reasonable instinct, but it may not be the right one.
Before you act on it, consider this. The case for buying property before any legislative change deserves more consideration than the current narrative allows, and doing nothing is not the safe option it appears to be.
What you may not have encountered yet is a reasoned argument for why acquisition, right now, could be the more defensible position.
If you would like to understand what the proposed CGT discount changes could mean for your specific portfolio position, contact our team at Precision Wealth Management.
Reason 1: Australia’s Tax Reform History Favours Transition Arrangements for Existing Holdings
When the Howard Government restructured capital gains tax in 1999 following the Ralph Review, Australia moved from a complex indexation method to a simplified 50% discount for assets held longer than 12 months. Assets acquired before 21 September 1999 were not simply cut off. Investors with pre-reform holdings retained the ability to choose between the indexation method and the new discount method, depending on which produced the better outcome for their circumstances.
This is not a one-off. The same principle has appeared throughout Australian tax reform at every level of complexity. When the government restructured superannuation contribution caps, it introduced transitional protections for existing balances. When trust distribution rules came under scrutiny, the debate centred on how to apply changes prospectively rather than retrospectively. This pattern reflects a legislative and political principle: that investors who made decisions in good faith under existing rules are entitled to reasonable protection when those rules change.
The practical implication for property investors ahead of CGT changes is significant. If you purchase an asset before any CGT discount reform takes effect, your acquisition date becomes the relevant reference point. Should grandfathering or transitional arrangements apply to new legislation, as they have in every comparable reform in recent history, property purchased today may well be protected under current discount rules for the duration of your hold period.
To be precise: no legislation has passed, and the specific structure of any transition arrangement would depend entirely on the final bill. But the weight of Australian precedent sits firmly on the side of prospective application, not retrospective imposition. Acquiring now, before any change, puts you in the best possible position to benefit from that precedent.
Reason 2: Selling Before the Change is Not a Neutral Decision
There is an assumption embedded in the “sell before the changes” narrative that rarely gets examined. The assumption is that selling avoids risk. It does not. It simply replaces one set of risks with another.
Selling a well-performing asset before any legislation has passed means triggering a CGT event today, at current rates, based on a reform that may not proceed, may be amended, or may include protections that would have applied to your holding regardless. You are also paying real estate agent fees, legal costs, and potentially stamp duty on any reinvestment. And you are crystallising a capital gain now rather than managing it over time.
The reform may not proceed at all. Proposed changes to negative gearing, trust distributions, and superannuation contributions have all faced significant political resistance in recent years.
For investors in South East Queensland specifically, whether based on the northern corridor near North Lakes or the Sunshine Coast around Birtinya, an early exit also means stepping away from a market that continues to attract strong fundamentals
Reason 3: The South East Queensland Market is Operating on its Own Timeline
The investment case for South East Queensland is grounded in specific, verifiable conditions that exist regardless of what happens to the CGT discount.
According to the ABS, Queensland recorded the highest net interstate migration of any state in 2022 to 2024, with much of the growth concentrated in South East Queensland. Brisbane’s Cross River Rail project, with major construction continuing through 2027 and first passenger services expected in 2029, is driving renewed developer and buyer interest across inner and middle ring suburbs. The 2032 Olympic and Paralympic Games, with confirmed Athletes Village precincts and transport infrastructure commitments, represents a multi-billion-dollar investment in the region’s liveability and connectivity over the next decade.
Meanwhile, housing supply in South East Queensland remains structurally constrained. Construction cost pressures, planning delays, and land availability have all contributed to a persistent undersupply relative to demand. In this environment, waiting on the sidelines while a tax reform debate resolves itself means waiting while capital growth continues to accrue to those who acted earlier.
The CGT discount question is a long-term concern, realised at the point of sale. Market growth is happening now.
Reason 4: The CGT Discount is One Variable in a Much Larger Equation
Much of the media coverage frames the proposed changes as though the CGT discount is the primary driver of property investment returns. It is not.
A property generating a gross yield of 4.5%, with meaningful depreciation benefits, a well-structured debt position, and 6% annual capital growth, produces a materially different total return picture than the CGT discount component alone would suggest. Even under a scenario where the discount is reduced, the combined contribution of rental income, tax deductions, debt reduction, and capital appreciation can continue to deliver strong net returns.
The variables that actually determine whether a property investment performs are the quality of the asset, the entry price, the financing structure, and the hold period. A change to the CGT discount rate shifts one input in a multi-factor equation. It does not rewrite the equation.
Investors who focus exclusively on the CGT discount in their decision-making are often underweighting the variables that have far more influence on outcomes over a ten to fifteen year hold period. Professional modelling of your specific position, rather than a generalised media narrative, is how you make that determination accurately.
Reason 5: History Shows That Investors Who Pause During Reform Debates Often Pay for it
The current moment is not the first time Australian property investors have faced the prospect of significant policy change. It is worth examining what actually happened to those who waited.
During the 2016 federal election campaign, Labor’s negative gearing reform proposal generated substantial investor anxiety, and some buyers stepped back from the market. The reform did not proceed. What did proceed was continued price growth in high-demand markets. Investors who paused in Brisbane, Sydney, and Melbourne through 2017 and 2018 watched median values continue to rise before the policy was formally abandoned following the 2019 election result. The median dwelling values in Brisbane continued to rise in the two years following the height of the negative gearing debate, before the broader national correction of 2018 to 2019.
The same dynamic played out during the GST debate in the late 1990s and again during the mining tax discussion in the early 2010s. Proposed reforms generated uncertainty, uncertainty generated hesitation, and the market moved on regardless.
The lesson is not that policy risk does not exist. It does. The lesson is that the cost of waiting for certainty is often higher than investors expect, because markets do not wait for legislative clarity before continuing to price in supply and demand.
A Note on When the Conventional Wisdom is Correct
To be clear: there are circumstances in which selling before a legislative change is the right decision. Investors who are nearing the end of a planned hold period, who are holding assets that would underperform regardless of tax treatment, or who have specific estate or liquidity requirements may find that an exit now is genuinely appropriate for their position.
The argument here is not that buying is always right. It is that the case for acquisition is substantially stronger than the current narrative allows, and that reflexive selling based on incomplete information carries its own real cost.
This article is general in nature and does not constitute personal financial advice. Please consult a qualified adviser before making any investment decisions.
Frequently Asked Questions
The proposed changes relate to reducing the current 50% capital gains tax discount available to individual investors who hold an asset for longer than 12 months. As of the time of writing, no legislation has been passed. Any changes would require parliamentary approval, and the timeline and final structure remain uncertain. This uncertainty is itself a reason to seek personalised advice before acting.
This depends on the final structure of any legislation, which has not yet been determined. However, Australia has a strong precedent of applying major tax reforms prospectively rather than retrospectively, and of including transition arrangements that protect investors who made decisions under existing rules. Assets purchased before any reform takes effect are generally well positioned to benefit from those arrangements, though no specific outcome can be guaranteed.
Not for most investors. The CGT discount is one component of total investment return. Rental income, depreciation benefits, debt structuring, capital growth, and hold period all contribute meaningfully to outcomes. A reduction in the discount shifts one variable in a multi-factor equation. The investment viability of any specific asset depends on a full analysis of all those factors, not the discount rate alone.
Selling now triggers a CGT event at current rates, incurs transaction costs, and removes you from a market that continues to show strong fundamentals in South East Queensland. If the proposed reform does not proceed, or includes transition protections, you will have incurred those costs without the benefit you anticipated. The decision to sell should be based on your total position, not a single policy headline.
The answer depends on your current portfolio structure, your income position, your hold period intentions, the specific asset you are considering, and how any transition arrangements are ultimately structured. If you would like to model what grandfathering protection on a new acquisition could mean for your tax position, alongside a full return profile for the right asset in South East Queensland, contact our team at Precision Wealth Management.
