The government has five options to change negative gearing and capital gains tax.
| Component 1 – Capital gains tax | Component 2 – Negative gearing | ||
|---|---|---|---|
| Option 1 | Remove the CGT discount for all residential property assets purchased after July 1, 2024, with property assets purchased before this date to be grandfathered under existing CGT discount arrangements. | Remove negative gearing arrangements for residential property purchased after July 1, 2024, with homes purchased prior to this date to be grandfathered under existing negative gearing arrangements. | $27.7 billion |
| Option 2 | Remove the CGT discount for all residential property assets purchased after July 1, 2024, with property assets purchased before this date to be grandfathered under existing CGT discount arrangements. | Remove negative gearing arrangements for an investor’s second or subsequent investment property interests. | $17 billion |
| Option 3 | Remove the CGT discount for all residential property assets purchased after July 1, 2024, with property assets purchased before this date to grandfathered under existing CGT discount arrangements. | As per Option 2, but also disallow rental deductions for vacant properties. | $15.6 billion |
| Option 4 | As per Options 1 and 2, but provide a 50% CGT discount for new homes built after July 1, 2024, if these homes are held for longer than 3 years. | Remove all negative gearing arrangements. | $59.9 billion |
| Option 5 | No changes to CGT. | As per Option 4, but disallow deductions for vacant properties, and allow negative gearing for new properties purchased or built after July 1, 2024. | $50.4 billion |
