Capital Gains Tax on Property – What Investors should know

Labour’s proposed capital gains tax (CGT) on property, reported this week by NBR, signals a shift that could directly affect anyone investing in real estate (excluding the family home).

If introduced, profits made on selling investment property could soon be taxable — meaning the cash you keep after a sale could be less than expected.

What this means for property owners

The main takeaway is simple: if you sell a property after the new start date, you may need to hand a portion of your profit to Inland Revenue. This reduces your net proceeds — the money left in your pocket after everything’s settled. Investors will need to plan ahead so they’re not caught short when the tax bill arrives. That may mean keeping some of the sale funds aside or adjusting loan repayments to maintain cash flow.

Timing will be crucial.

If the policy becomes law, the introduction date will determine which sales fall under the new rules. Those already considering selling might weigh up whether an earlier sale, before the start date, makes more sense. The numbers should guide that decision, not just the headlines.

Still early days

At this stage, detail on the proposed CGT is limited. We don’t yet know the exact design, timing, or exemptions that might apply. Until more clarity is provided, any firm advice or major decisions would be premature. The most useful step now is to stay informed and model a few “what if” scenarios rather than rushing to act.

Looking ahead

While this version of CGT focuses on property, it could set the stage for future changes that reach other types of capital gains — like shares or business sales. For now, property remains the focus, but it’s worth keeping an eye on how far the conversation goes.

Lincoln Sharp, Director

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This article contains general information only and based on information available at the date of publication. You should obtain advice for your personal circumstances.