How CGT Rules Affect Housing Affordability

Understanding CGT and Housing Stress

Housing affordability continues to challenge Australians, especially first-time buyers. Recent discussions in NSW highlight that capital gains tax (CGT) discounts and negative gearing disproportionately benefit wealthy investors, pushing property prices higher and making it harder for everyday Australians to own a home.

We know that financial stress from housing pressures affects both your financial and overall wellbeing. Understanding these tax rules and their impact can help you make informed decisions and take steps to stay financially secure.

Read the full Guardian report here:
👉 The Guardian: CGT Discount and Housing Affordability

How CGT Discounts and Negative Gearing Influence Housing

1. Capital Gains Tax Discount

The 50% CGT discount applies to investments held for over 12 months. It lowers the effective tax rate for investors, boosting after-tax returns and enabling more aggressive bidding on properties. This advantage often outpaces first-time home buyer support.

2. Negative Gearing

Negative gearing allows investors to offset property losses against other income, further increasing their purchasing power. Combined with the CGT discount, this encourages housing investment over homeownership for everyday Australians.

3. Rising Investor Lending

NSW Treasury reports show lending to investors reached $139bn in 2025, compared with $64bn to first-time buyers. These imbalances highlight how policy settings amplify inequality in housing access.

Impact on Everyday Australians

High investor demand and tax advantages can lead to:

• Rising house prices, outpacing wage growth.
• Reduced access to affordable homes for first-time buyers.
• Increased financial stress, particularly for young households.

Housing stress is not just financial; it affects wellbeing, sleep, and long-term life planning. Tools like the MyMoneyMedic PulseCheck can help you understand how financial stress affects your health.

Tips to Navigate Housing Stress

💡 Practical Advice from MyMoneyMedic

1. Know Your Budget
   Understand what you can realistically afford, including potential interest rate changes.
2. Explore Housing Alternatives
   Shared ownership, co-living, or regional areas may provide more accessible options.
3. Build Savings Strategically
   Even small amounts can grow over time, helping with deposits or emergency funds.
4. Seek Financial Guidance Early
   A financial counsellor can help with planning, budgeting, and mortgage strategies:
   👉 Care Portal
5. Mind Your Wellbeing
   Financial stress can affect mental health. Mindfulness, exercise, and talking to trusted advisors are key to maintaining balance.

🎥 Taxing the Dream: The NSW Housing Affordability Challenge..

Final Thoughts: Protect Your Wellbeing Amid Policy Shifts

While changes to tax settings may take time, your financial resilience and mental wellbeing are within your control. By budgeting carefully, exploring options, and seeking support early, you can navigate housing stress more confidently.

We believe that understanding the system and taking proactive steps are essential for reducing financial anxiety and staying on track toward your goals.