Ray White and CPA Australia Sound the Alarm on CGT and Negative Gearing Reform — What Investors Need to Know

The federal government is currently considering the most significant changes to property investment tax settings in a generation — potentially capping negative gearing at two properties and slashing or eliminating the capital gains tax discount. This week, the industry fought back. Ray White — Australia's largest real estate group, managing 222,036 rental properties — wrote to all 10,500 of its Australian members urging opposition to the reforms. CPA Australia, representing 176,000 accounting professionals, issued a formal warning that standalone changes risk making the rental crisis worse. Here's what the proposals actually are, why the industry is alarmed, and what property investors should be doing right now.

What the Government Is Actually Proposing

Treasury is actively modelling two changes ahead of the May federal budget:

The government's stated rationale is straightforward: the existing tax settings give property investors a structural advantage over owner-occupiers and first home buyers, inflating demand and pushing prices beyond reach. The CGT discount in particular — which effectively halves the tax on investment gains — is seen as a subsidy that rewards existing wealth over new entrants to the market.

Ray White: "You'll Shrink the Rental Market"

Ray White Managing Director Dan White and Chief Economist Nerida Conisbee this week sent a letter to all 10,500 Australian members of the network — agents who collectively manage 222,036 rental properties — setting out their opposition to both proposed changes.

The core of Ray White's argument is not about investor returns. It's about renters. Australia's private rental market is almost entirely dependent on small private investors: 83.1% of the country's rental housing is owned by individual private landlords, not corporations or institutions. If tax changes make property investment materially less attractive, those landlords sell — and renters lose homes.

The Victoria figure is Ray White's most powerful exhibit. When the Andrews government increased land taxes and tightened compliance requirements on rental properties from 2023 onwards, the state lost 24,000 rental properties in a single year. Landlords sold up — often to owner-occupiers — and renters lost access to those homes. The rental market tightened further. Rents went up.

Ray White argues the same dynamic would play out nationally if CGT and negative gearing settings are wound back without simultaneously expanding supply. Investors who can no longer make the numbers work on existing properties won't hold — they'll sell, and the homes won't be replaced by new rentals at anything like the same pace.

The Institutional Investor Warning

There is a second concern in Ray White's letter that deserves particular attention: the risk that private landlords are replaced not by owner-occupiers, but by institutional investors — large funds, build-to-rent corporations, and foreign capital.

In the United States, where policy settings and market conditions have encouraged the withdrawal of small private landlords, institutional investors now own more than 20% of rental housing in some supply-constrained markets. Rents in those markets have been no more affordable — and often less — than markets dominated by private landlords. The concern is that "fixing" Australian housing policy by driving out small investors could hand the rental market to large corporations with even less accountability to individual tenants.

This isn't a hypothetical. Australia's build-to-rent sector is already expanding rapidly, and a policy environment that penalises individual investors while providing concessions to large-scale developers could accelerate that shift significantly.

CPA Australia: "Don't Tweak One Lever"

CPA Australia — with 176,000 members across more than 100 countries — added its voice to the pushback this week, issuing a formal position statement opposing standalone changes to the CGT discount and negative gearing.

The organisation's Tax Lead, Jenny Wong, put it plainly: "CGT and negative gearing are part of a bigger tax ecosystem — tweak one lever on its own and you risk pushing further pressure into the rental market or distorting investment decisions."

CPA Australia's concern is systemic. Negative gearing isn't just a property investment concept — it's the general principle that losses on income-producing assets can be deducted against other income. That principle applies to shares, businesses, and farms, not only property. Changes designed to target property investors could have unintended consequences across the broader investment landscape if not carefully designed with transition arrangements and a whole-of-system view.

CPA Australia also echoed a point Treasury itself has acknowledged: the core problem in the Australian housing market is that not enough homes are being built. Tax policy on its own — whether easing or tightening — will not solve a supply shortage. "Changes to tax settings should go hand-in-hand with practical measures to lift housing supply, boost construction capacity and speed up planning systems," Ms Wong said.

The History Lesson: 2017–2019

This is not Australia's first encounter with negative gearing and CGT reform as an election issue. In the lead-up to the 2019 federal election, Labor campaigned on very similar proposals — capping negative gearing to new builds and reducing the CGT discount from 50% to 25%. The policy debate was fierce, and it had a measurable market effect: monthly transaction volumes fell 37% during the 2017–2019 period of sustained pre-election uncertainty.

Property investors don't wait for legislation to change their behaviour. The prospect of change — even unconfirmed — is enough to change buying and selling decisions. That 37% transaction drop during the uncertainty phase is Ray White's clearest data point for why the current debate, even before any legislation has been tabled, is already affecting the market.

What This Means If You Own Investment Property

The most important thing to understand is the timeline. No changes have been legislated. The election has not been called. The Coalition has explicitly stated it would not support winding back these concessions. If there is a change of government, the reforms may not proceed at all. If Labor wins and implements changes, they will almost certainly include transition arrangements — existing investors will not have the rules changed on them overnight.

The Bottom Line

Ray White and CPA Australia are making a coherent argument: Australia has a rental supply crisis, private landlords provide 83% of that supply, and tax changes that drive those landlords out of the market will make the rental crisis worse before it gets better — regardless of what they do for first home buyer affordability. The Victoria precedent — 24,000 rentals lost in one year — is real and recent.

But the government's counter-argument is also coherent: the current tax settings give investors a structural advantage over owner-occupiers, and that advantage has contributed to price inflation that locks a generation out of homeownership.

Both things can be true simultaneously. The real question is whether the government reforms both sides of the equation — restricting investor concessions and dramatically expanding supply — or just one. CPA Australia's position is clear: do both together, or don't do it at all.

What happens next will depend on what the government chooses to legislate — and whether supply-side measures accompany any tax changes.

Sources: Ray White Group research and member communication (March 2026); CPA Australia position statement on CGT and negative gearing (March 2026) via Medianet; Elite Agent, "Ray White warns proposed investor tax changes could reduce rental supply"; ABS rental market data; Treasury modelling briefings (March 2026)