Update: Australian tax law has changed (last reviewed 5 September 2026)
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026, passed 26 June 2026, changes how negative gearing and capital gains tax apply to Australian residential property from 1 July 2027. In summary: negative gearing will be limited to newly built properties (properties held at 7:30pm AEST 12 May 2026 are grandfathered), and the 50% CGT discount is replaced by cost base indexation with a 30% minimum tax rate on capital gains.
Parts of this article may not yet reflect those changes. Please confirm the current rules on the ATO website and speak to a registered tax agent before acting. This site provides general information only.
One of the most persistent debates in Australian property investment is how long to hold. The conventional wisdom — “hold forever”, “never sell” — is a useful heuristic that prevents panic selling but obscures a more nuanced truth: holding period should be driven by transaction costs, CGT discount thresholds, portfolio strategy, and whether the property is still the best use of the capital locked inside it. The answer to “how long should I hold?” is rarely forever — but it’s almost never less than seven years in a metropolitan market, and the maths are more straightforward than most investors realise.
Why Transaction Costs Set a Minimum Holding Period
CGT Discount: The 12-Month Rule You Already Know, and the 7-Year Reality
Most investors know the 50% CGT discount: hold a property for more than 12 months and you pay capital gains tax on only 50% of the gain. What fewer investors internalise is how CGT interacts with their personal income in the year of sale. Selling a property after 10 years of 5% annual growth generates a capital gain that, even at 50% discount, can push a $130,000/year salary earner into the top tax bracket for that year — the tax bill can be $50,000–$100,000 on a significant gain. Strategies to manage this include: timing the sale in a low-income year (before a promotion, during a career break, or in early retirement); using the gain to make concessional super contributions (capped at $27,500/year, or more via carry-forward contributions); or structuring the sale settlement date to straddle two tax years for a partial income split. The CGT bill does not eliminate the investment — it’s a cost of success — but knowing it is coming is essential for planning.
The honest answer to “how long should I hold?” is: long enough for compound growth to dwarf transaction costs, for the CGT discount to apply, and for the local market fundamentals you bought for to materialise. For most Australian properties, that’s a minimum of seven years — and usually more.
One Property at a time
Brick by Brick 🧱
General Advice Warning: This article is general in nature and does not constitute personal financial advice. Please consult a licensed financial adviser before making investment decisions.
