It’s a move that’s sure to stir debate from Sydney to Canberra. The New South Wales government has called for a rethink on capital gains tax, arguing that its removal could help ease Australia’s housing crisis — and reignite investment in new homes.
NSW Calls for Capital Gains Tax Reform
The NSW government has urged the federal government to consider scrapping capital gains tax (CGT) on certain property transactions, particularly those related to build-to-rent developments. The proposal is part of a broader push to boost housing supply and make investment in long-term rental projects more attractive.
Under current rules, developers face CGT when selling residential property assets, which the state argues discourages investment in large-scale housing projects. Removing or reducing that tax, NSW says, could accelerate construction at a time when Australia is facing one of its worst housing shortages in decades.
The proposal comes amid growing pressure on both state and federal governments to find solutions for soaring rents and limited supply. Nationally, vacancy rates remain near record lows, while home prices continue to climb despite higher interest rates, explains 9News.
Federal Response Still Unclear
So far, the federal government has not committed to any changes. Treasurer Jim Chalmers has acknowledged the challenges in the housing sector but has stopped short of endorsing the NSW plan. Canberra maintains that while tax settings play a role, broader economic factors — like labour shortages and material costs — are equally important in fixing supply issues.
Still, the suggestion has reignited long-standing debate about how Australia treats property investment. Economists remain divided: some argue that removing capital gains tax incentives could distort the market, while others say it’s a necessary step to unlock more housing stock.
Build-to-Rent Model Gaining Momentum
The build-to-rent sector, which allows developers to construct and retain large residential complexes for long-term rental, has been gaining traction across the country. Supporters say it can provide more stable rental options and encourage institutional investment in housing.
However, developers argue that the current tax framework makes the model less viable in Australia compared to other countries. NSW’s latest call for reform is aimed squarely at making that sector more competitive — and more appealing to investors who might otherwise look overseas.
A Test for Housing Policy
The push to scrap or reduce capital gains tax could become a flashpoint between state and federal leaders in the months ahead. With housing affordability now one of the most pressing issues facing voters, policymakers are under pressure to deliver bold — and sometimes controversial — solutions.
Whether Canberra takes the bait remains to be seen. For now, NSW has made its position clear: if governments are serious about solving the housing shortage, the tax conversation can’t be off limits.
