Should you hold or sell your investment property?
If you own an investment property, there’s a good chance this question has crossed your mind more than once lately. Between the recent changes to capital gains tax, interest rates that have been anything but predictable, and a property market that continues to shift, it’s worth stepping back and looking at the facts before drawing any conclusions.
Let’s take a look.
What’s changed with CGT and negative gearing
The 2026–27 Federal Budget delivered the most significant changes to property taxation in decades, and those changes are now law. From 1 July 2027, the 50% CGT discount that has applied since 1999 will be replaced with a new system: cost base indexation, combined with a minimum tax on the real gain. In practice, this will affect how much tax is payable when a property is eventually sold.
Negative gearing has also changed. From 1 July 2027, losses on established residential properties purchased after 12 May 2026 will only be deductible against rental income or capital gains from residential property, rather than against salary and wages as is currently the case.
What this means if you already own your property
For most existing investors, the impact is more limited than the headlines suggest. If your property was purchased before 7:30pm on 12 May 2026, it isn’t affected by the negative gearing change. On the CGT side, only the portion of the gain accruing from 1 July 2027 onward falls under the new rules, with any gain accrued before that date continuing to be taxed under the current system, including the 50% discount.
In short, these reforms are largely forward-looking. They shape how future gains and losses will be treated, rather than altering the value already built into a property you’ve held for some time.
The broader economic picture
Interest rates add another dimension to this decision. The Reserve Bank raised the cash rate several times earlier in 2026 before holding steady over winter, and opinion remains divided on whether a further rise is likely this month or whether rates have peaked. At the same time, property values in a number of markets have softened, with some commentators forecasting further declines as buyer demand cools and borrowing capacity tightens.
There’s no clear signal either way. A softer market can make holding through a downturn feel less comfortable, but it can equally mean the timing isn’t right to sell if there’s no pressing need to. The right course of action depends on your own financial position and objectives.
Factors to consider
Rather than approaching this as a simple “should I sell” decision, it’s worth working through a few key questions.
- Performance. Is the property generating a reasonable income, growing in value, or costing more than it returns each month?
- Timeframe and objectives. Does the property still align with your broader financial plan, whether that’s funding retirement, building a portfolio, or something else entirely?
- Changing circumstances. Your cash flow, borrowing capacity, and appetite for ongoing management may look quite different today than when you first purchased.
- The true cost of selling. Agent fees, any remaining CGT liability, and how the proceeds would be deployed all factor into the outcome, and are best worked through with proper figures rather than assumptions.
Where to from here?
No two properties, or investors, tell the same story. Holding and selling both carry trade-offs, and the right decision for you will depend on factors no headline or general rule can capture. What the CGT and negative gearing changes do underline is the value of understanding precisely where you stand, rather than making a decision based on assumption or instinct.
Please don’t hesitate to reach out to a Sciacca’s financial planner, we’re always available to help you review your financial strategy and plan for the future.