Property tax reforms split investor outcomes, e61 modelling finds
Australia’s changes to negative gearing and capital gains tax could produce sharply different outcomes for property investors, with new modelling finding a narrow majority would have paid more tax while a substantial minority would have paid less.
Research by the e61 Institute modelled the proposed tax settings against 920,000 housing investments held between 2008 and 2025. It estimated that 53 per cent of investors would have faced a higher overall tax bill and 43 per cent would have paid less.
The results suggest the impact depends heavily on investment performance. Properties delivering stronger capital appreciation, including some standalone houses on larger blocks, are more likely to attract higher tax, while lower-growth investments may receive comparatively more favourable treatment.
Capital gains changes produce mixed outcomes
Under the reforms, the existing 50 per cent capital gains tax discount is being replaced with inflation-based cost-base indexation and a minimum 30 per cent tax rate on capital gains. Treasury says the approach is intended to tax real, rather than inflationary, gains and apply the system more consistently across asset classes.
The e61 modelling found the CGT changes would have reduced tax for 54 per cent of the investments analysed and increased it for 42 per cent.
E61 senior research economist Elyse Dwyer said the new structure was likely to raise additional government revenue primarily from investments producing the strongest returns. The institute’s analysis concluded that higher-performing investments account for most of the expected increase in tax revenue.
Treasury has estimated the CGT changes will raise about $11.8 billion over a decade, although that figure covers assets beyond residential property, including shares.
Negative gearing has a different effect
The modelling produced a different distribution for negative gearing.
E61 estimated the changes would increase rental-income tax for 49 per cent of investors, reduce it for 28 per cent and leave the remainder broadly neutral.
Under the government’s changes, negative gearing for residential property is being restricted to new builds, while existing investments are protected from the new arrangements. Losses on affected established properties can still be carried forward and deducted against future residential-property income rather than against unrelated income such as wages.
Treasury estimates the negative-gearing changes will raise an additional $31.3 billion in revenue over the decade to 2036–37.
Debate continues over property-market effects
The modelling does not settle the broader debate over how the reforms may affect investment behaviour or housing prices.
Tulipwood Economics director Joe Branigan said the number of investors paying more or less tax did not, by itself, establish the overall investment effect because the size of individual tax changes also mattered.
Centre for Independent Studies chief economist Peter Tulip said the research was broadly consistent with estimates that the reforms would have a relatively modest effect on investor incentives. He also argued that recent interest-rate increases needed to be considered when assessing falling property prices.
Treasury has estimated the tax changes could reduce house-price growth by about 2 per cent over several years and increase average rents by roughly $2 a week, or about $100 a year. Those estimates have been challenged by parts of the property sector and some housing economists.
For investors, the e61 findings indicate that the tax outcome is unlikely to be uniform. The effect will vary with capital growth, rental performance, holding periods and the type of property held, making investment-level analysis more important under the revised tax framework.
SOURCE ATTRIBUTION:
Based on reporting by The Australian Financial Review, published 24 September 2026. Source: The Australian Financial Review
