Potential reform to the CGT discount may be in the works after the Senate inquiry report concluded the tax break is skewing housing towards investors.
The Senate Select Committee’s Report on the Operation of the Capital Gains Tax Discount adds to mounting evidence that long‑standing tax breaks, like the capital gains tax discount and negative gearing, are contributing to Australia’s worsening housing crisis.
What is capital gains tax and why does it matter?
When someone sells an investment property and makes a profit, they pay capital gains tax (CGT) on part of that profit. But for many years, investors have received a 50% CGT discount, meaning they only pay tax on half of what they earn from selling the property.
This discount was originally introduced to encourage investment, but over time it has had unintended consequences. The Senate report confirms what we've known for years: these tax breaks make it easier and more attractive for investors to buy property, while people trying to buy their first home are left competing in an increasingly unequal market.
Housing affordability slips further out of reach
The Senate report shows that the CGT discount is skewing home ownership away from owner‑occupiers and toward investors, making it harder for individuals and families to secure a stable place to live. It also highlights how these tax settings are contributing to broader inequality with increased divide between high and low income households, as well as between younger generations and those who bought into the market decades ago.
It's not only home ownership that remains unaffordable, new data from the latest realestate.com.au Rental Affordability Report found that rental affordability is hitting their worst level on record with rental prices 55% higher than at the start of 2020.
According to the report:
- A typical income‑earning household could afford just 37% of rental properties advertised between July and December 2025.
- National advertised rents climbed to a record median of $650 per week at the end of 2025, up from $420 before the pandemic.
- For low‑income households earning under $75,000, only 2% of rentals were affordable in recent months.
At a time when many Australians are struggling to keep up with rising rents, mortgage stress, and a shortage of affordable homes, reviewing tax policies and commitment to sensible rental reform are more important than ever.
Putting public resources where they matter most
Housing is foundational. Without the security of a home, it becomes harder to maintain employment, support children’s education, or stay physically and mentally well. Anglicare WA is calling on the Federal Government to use this report as a springboard for meaningful reform. By phasing out the CGT discount and negative gearing, and reinvesting into public and community housing, the government can address the root causes of housing inequality, not just the symptoms.
Redirecting funds away from investor tax breaks and into homes for people who need them most would help rebalance Australia’s housing system. It would also ensure that public resources are used to support the health, stability and wellbeing of communities.
Anglicare WA welcomes the Senate Committee’s findings and urges the government to take decisive steps toward a fairer, more balanced housing future for all Australians.
