Draft CGT Laws Could Deter Investment, Property Council Warns

The Property Council and mortgage industry are calling for urgent rewrites of draft capital gains tax laws due to start on 1 July 2027.

Industry Groups Sound Alarm on Draft Tax Laws

MPA Australia reports that the Property Council of Australia has lodged a formal submission to Treasury urging a second round of consultation on proposed capital gains tax and negative gearing legislation — and its concerns go to the heart of housing supply, investment returns and the viability of projects that haven't yet broken ground.

The draft laws, if passed in their current form, are set to take effect on 1 July 2027. The Mortgage & Finance Association of Australia has also submitted to Treasury on the second tranche of the reforms, calling for early certainty, clear Australian Taxation Office guidance and practical worked examples before that commencement date.

For property investors and anyone tracking the housing market, these submissions are worth understanding before the final legislation lands.

What the Property Council Is Warning About

Mike Zorbas, chief executive of the Property Council of Australia, has not pulled punches in his submission. His argument is straightforward: poorly designed tax law doesn't just create confusion — it stops projects before they start.

"Confusion in tax law is projected onto the real world: delayed projects, stalled financing and new homes that never reach the market," Zorbas said.

The Property Council's central concern is that the current draft legislation fails to adequately cover the full spectrum of housing types that Australia needs to meet the National Cabinet target of 1.2 million new homes by 2029. That deadline is less than three years away, and Australia is already well behind schedule on housing supply.

Zorbas specifically called out build-to-rent assets, retirement villages, master-planned communities and student accommodation as housing types that are not properly addressed in the draft laws across their full development lifecycle. If developers of these asset classes are left uncertain about their tax treatment, the rational response is to delay or cancel projects — exactly the opposite of what the government is trying to achieve.

"Australia is already miles behind on housing supply. If the government gets these settings wrong, the result is less investment in supply and more pressure on buyers and renters," Zorbas said.

He added that all housing types — including master planned communities, build-to-rent apartments, retirement villages and student accommodation — should be covered under the reforms, and that the government needed targeted ministerial powers to address unintended consequences quickly rather than relying on successive rounds of legislation while projects remained stalled.

The Property Council is asking for three things: a second round of industry consultation, ministerial relief powers to fix unintended consequences quickly without waiting for parliament, and a statutory review after two years. Zorbas described those conditions as the minimum standard acceptable when investment settings were being rewritten during a national housing crisis.

"Treasury should implement industry's feedback and consult again, fix the blind spots and make sure every part of the housing continuum is backed in, not taxed out," Zorbas said.

Meanwhile, broker-focused advocacy has also intensified around the same issues. Joseph Daoud, founder of It's Simple Finance, has confirmed a charity tennis match against Prime Minister Anthony Albanese will go ahead this spring — a match he won via a bid of $16,500 at the Midwinter Ball charity auction. Daoud has said his intention is to use the opportunity to raise the concerns of Australians worried about what capital gains tax changes from the May Budget mean for their financial future.

What This Means for Investors and Borrowers

The interaction between tax policy and property investment is direct and real. Negative gearing — the ability to deduct property investment losses against other income — has been a cornerstone of residential property investment in Australia for decades. Restructuring it changes the return profile of an investment property in ways that ripple through to prices, rents and supply.

If the draft laws discourage new investment in housing, particularly in the build-to-rent, apartment and retirement sectors, the downstream effects include more competition for existing stock, upward pressure on rents and fewer options for buyers. Those outcomes tend to hit hardest at the bottom of the market — renters, first-home buyers and anyone trying to enter the market for the first time.

The MFAA's submission underscores a practical concern: uncertainty creates paralysis. Brokers and their clients need to know what the rules will be before they can finance a project or structure a purchase with confidence. If ATO guidance isn't clear and the legislation isn't settled well before the July 2027 start date, deals will fall over and new projects will be deferred.

For existing property investors, the immediate question is how any change to the capital gains tax discount or negative gearing rules affects your current portfolio strategy. If you're planning to buy an investment property, reviewing your borrowing capacity now — before the legislative picture firms up — makes sense. Use the borrowing power calculator to understand your current position and explore current investor loan options at /home-loans/investor.

The broader takeaway for buyers and investors is this: if you're considering a new investment purchase, the landscape between now and 1 July 2027 may look quite different from what follows. Purchasing under the existing rules — where they're clearly understood — carries less tax treatment uncertainty than relying on legislation that may still be in flux at commencement.

That's not a reason to rush into anything. But it is a reason to have a detailed conversation with your mortgage broker and tax adviser about the timing of any planned acquisition and how to structure it for flexibility. For investors already holding property, the refinance savings calculator can help you understand whether restructuring your current loans now makes sense while the rules are clear.