Capital Gains on Primary Residence

One of the reasons why the most expensive homes are so expensive, is that they are great way of making un-taxable profits for the rich. Any profit made from the sale of your primary residence is tax free. The top 20% of Australians (based on income) are collectively saving $8 billion each year from paying no CGT on property.

This disproportionately benefits the rich, and doesn’t benefit society.

We will place a cap on this, with only the first $2 million of the sale price being exempt.

This would affect roughly 15% of Sydney homes, 5% of Melbourne homes, and very few homes elsewhere. The outcome is threefold:

• Increased taxation on the rich
• High value investment being redirected out of the property market
• Lower prices for high value property, which to some degree will trickle down to homes below the $2 million threshold

Property sales over $2 million are already required to be reported to the tax office, to make sure they are not being sold to overseas investors, so compliance costs are already partially covered.