Written

For

The

Australian

-

Property

investors

fearing

CGT

budget

shock

freeze

purchases

What if the safest move right now is to do nothing? That's the conclusion a lot of mum-and-dad property investors are reaching as they wait to see what Treasurer Jim Chalmers pulls out of his hat next month.

The chatter is loud. Cut the CGT discount from 50 per cent to 33 per cent — or even down to 25 per cent. Cap negatively geared properties at two per investor. Maybe both. The think tanks and crossbenchers say it's needed to cool "debt-fuelled speculation" and ease housing affordability for younger Australians. I get the argument. But the people I'm seeing in my office aren't property barons. About 70 per cent of investors own just one investment property. These are everyday Australians who did what they were told — buy a property, build wealth, don't be a burden in retirement.

You'd think they'd be rushing to buy before the rules change, banking on grandfathering. The opposite is happening. My clients are sitting on their hands. The risk that Chalmers springs a surprise without grandfathering provisions is simply too big a bet on a multi-hundred-thousand-dollar purchase.

And the practical questions are messy. If there's a two-property cap, what happens to couples who bought jointly versus those who bought individually? Does the cap apply per family trust, per company, or across all entities? Because if it's per entity, accountants will spin up structures faster than the ink dries on the budget papers. Then there's super — if the CGT discount drops to 33 per cent to match accumulation phase, what happens to pension-phase property currently sitting CGT-free under the $2m cap?

History tells us one thing: when you tax people more, they restructure. I expect a surge in SMSF activity as investors hunt for ways around any new rules. Whatever Chalmers announces, the unintended consequences will keep advisers and accountants busy for years.