Capital Gains Tax Discount in 2026: What Every St George Property Investor Must Know

The CGT Conversation Every Investor Is Having

If you've been following the news lately, you've probably noticed capital gains tax (CGT) creeping back into the headlines.

Treasurer Jim Chalmers has openly acknowledged that tax reform is on the table. With housing affordability front and centre in political debates, speculation is growing that the 50% CGT discount for property investors could be reduced—potentially to 40%, 33%, or even 25%.

As a St George real estate specialist who has guided investors through multiple market cycles over 25+ years, I want to cut through the noise and give you practical, local insight on what this means for your investment property—especially if you own in Hurstville, Kogarah, Rockdale, or anywhere else in our region.

What Is the CGT Discount and Why Does It Matter?

The Current System (2026)

When you sell an investment property you've held for more than 12 months, you currently receive a 50% discount on the capital gain. Here's how it works:

Without the discount, you'd pay tax on the full $400,000—roughly $188,000 at the top marginal rate.

The discount was introduced in 1999 to replace the previous indexation system and encourage long-term investment. For property investors, it's been a cornerstone of wealth-building strategy.

What's the Government Actually Considering?

Key Points from Current Discussions

At this stage, nothing has been legislated. However, several consistent themes are emerging:

1. Discount Reduction Options Being Floated:

• 40% discount (moderate reduction)
• 33% discount (significant reduction)
• 25% discount (major reduction)

2. Focus Areas:

• Individual investors and property appear to be the primary focus
• Shares and business assets may be treated differently
• Superannuation funds may retain their current 33.3% discount

3. Grandfathering Uncertainty:

• It's unclear whether existing properties would retain the 50% discount
• New rules might apply only to future purchases—or more broadly

4. Timing:

• Any announcement would most likely come in the May Federal Budget



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What Would a CGT Discount Cut Mean for St George Investors?

Real Numbers for Local Properties

Let me show you what different discount levels would mean for a typical St George investment scenario:

Example: Hurstville Unit Purchased 2018 for $650,000, Sold 2026 for $850,000

CGT Discount	Taxable Amount	Tax Payable (47% rate)	Difference
50% (current)	$100,000	$47,000	—
40%	$120,000	$56,400	+$9,400
33%	$134,000	$62,980	+$15,980
25%	$150,000	$70,500	+$23,500

For a larger property—say a Kogarah house bought for $1.2M and now worth $1.8M—the differences become much more significant:

CGT Discount	Taxable Amount	Tax Payable (47% rate)	Difference
50% (current)	$300,000	$141,000	—
40%	$360,000	$169,200	+$28,200
33%	$402,000	$188,940	+$47,940
25%	$450,000	$211,500	+$70,500

The bottom line: A cut to 25% would see the effective tax rate on capital gains rise from about 23.5% to roughly 35% for top-rate taxpayers.

🧮 Calculate Your Capital Gains

Use our Capital Gains Tax Calculator to estimate your potential tax liability under different scenarios.

Capital Gains Calculator →

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Who Actually Owns Investment Property in Australia?

The Real Picture (Not What Headlines Suggest)

The current narrative often paints property investors as wealthy, high-income earners exploiting tax loopholes. The data tells a different story:

• 71.5% of investors own just one investment property
• 18.9% own two properties
• Fewer than 1% hold six or more properties
• More than half of investors sit outside the top 20% of income earners
• Common occupations include teachers, nurses, and tradespeople

Many of these people invested based on the rules at the time, with the goal of funding their own retirement. A reduction in the CGT discount means less cash on exit, which can materially disrupt retirement planning and potentially increase future reliance on the age pension.

The St George Investor Profile

In my experience across Rockdale, Brighton-Le-Sands, Sans Souci, and surrounding suburbs, the typical investor is:

• A working professional or tradesperson
• Often living in the St George area themselves
• Holding 1-2 investment properties long-term
• Planning to fund retirement through property equity
• Not a speculator flipping properties quickly

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How Does Australia Compare Globally?

CGT Treatment for Individual Property Owners

Country	CGT Treatment
Australia (current)	50% discount after 12 months
United States	0-20% rate (lower than income tax)
United Kingdom	18-24% rate (below top income rate)
Canada	50% discount on capital gains
New Zealand	Generally no CGT on long-term property

Australia's current 50% discount isn't "obviously generous" by global standards—it brings the effective tax rate roughly in line with other developed nations.

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Will Cutting the CGT Discount Fix Housing Affordability?

What the Economic Evidence Says

Here's where we need to be realistic.

Most independent economic modelling suggests that reducing the CGT discount alone would only have a modest impact on house prices—typically estimated at around 1-4% lower than they otherwise would be.

The more meaningful effects are likely to come from behavioural changes:

• Investors may hold properties longer to defer tax
• Turnover of existing housing could fall
• Some investors may rethink new purchases
• Greater focus on rental yield rather than capital growth

The Unintended Consequences

For renters: If investors delay selling, rental supply may not increase. If investor demand falls without new construction picking up, rents could rise. Over time, landlords may try to recover higher future CGT costs through rent.

For new construction: Apartment development may slow further as fewer investors buy off-the-plan—while construction, labour, and financing costs continue to rise.

Most economists agree: CGT reform alone is not a silver bullet. Without planning reform, construction incentives, and infrastructure investment, tax changes can only do so much.



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Practical Strategies for St George Property Investors

1. Review Your Current Portfolio Now

Before any changes take effect, understand your position:

• What is the unrealised capital gain on each property?
• What would your tax bill be if you sold today vs. in 3 years?
• How does each property fit into your retirement plan?

2. Consider Your Holding Period Strategy

If you were planning to sell in the next 1-2 years:

• You might consider bringing forward the sale before any changes
• However, don't panic-sell based on speculation alone

If you're holding for 5+ years:

• The impact is likely more manageable than headlines suggest
• Long-term fundamentals of St George property remain strong

3. Structure and Entity Review

This is the time to review:

• Whether your ownership structure is still optimal
• Trust arrangements and their CGT implications
• Superannuation fund contributions and strategies
• Succession planning considerations

4. Focus on Cash Flow, Not Just Capital Growth

With potentially higher CGT on exit, rental yield becomes more important:

St George Suburb	Median Unit Value	Typical Weekly Rent	Gross Yield
Hurstville	$780,000	$720	4.8%
Rockdale	$680,000	$620	4.7%
Kogarah	$680,000	$600	4.6%
Arncliffe	$784,000	$790	5.2%

5. Don't Make Fear-Based Decisions

Remember:

• Nothing is legislated yet
• Grandfathering for existing properties is possible
• Property remains one of Australia's most tax-advantaged investments
• Long-term St George fundamentals remain strong

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What Should Happen (A Fair Approach)

In my view, fairness would suggest that the Government grandfather existing investments, just as it did when CGT was first introduced in 1985.

Long-term investors who have borrowed, taken serious risk, and made sacrifices over decades shouldn't have the goalposts moved mid-stream—particularly when the impact directly affects retirement income.

If changes do proceed without grandfathering, I expect significant pushback from everyday Australians who have followed the rules and planned accordingly.

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The Bottom Line: Planning Beats Panic

At its core, this debate isn't about next year's tax bill—it's about long-term strategy.

If CGT rules do change, the biggest implications are likely to be around:

• When you sell
• How assets are structured
• How retirement and succession plans are funded
• The balance between growth and income

For long-term investors who aren't planning to sell anytime soon, the impact may be more manageable than headlines suggest—but early planning matters.

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Need Expert Guidance?

If you're a St George property investor concerned about CGT changes, I'm here to help.

While I'm not a tax accountant (and you should absolutely speak to one about your specific situation), I can help you:

• Understand current market values for your St George investment
• Assess whether now is the right time to sell or hold
• Connect you with trusted accountants and financial planners who specialise in property
• Provide market intelligence for informed decision-making

📞 Call: 0411 818 171 📧 Email: [email protected] 🗓️ Book a consultation: Schedule a free chat

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Disclaimer: This article provides general information only and does not constitute financial, tax, or legal advice. Capital gains tax rules are complex and depend on individual circumstances. Please consult a qualified accountant or tax professional for advice specific to your situation.

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Michael Kalinovski | St George Real Estate Specialist "Recognised | Respected | Recommended" 25+ Years Experience | 500+ Families Helped