Labour's Capital Gains Tax 2026: 28% Rate Explained

This is an election proposal, not current law. Labour announced a 28% capital gains tax (CGT) policy on 28 October 2025, ahead of the 7 November 2026 general election. It would only take effect if Labour forms the next government and passes legislation through Parliament. New Zealand’s current tax rules — including the fact that there is no general capital gains tax — remain exactly as they are today (2 August 2026) unless and until that happens.

This explainer sets out what Labour has actually proposed, sourced from the party’s own policy document, and flags the handful of details it has not yet specified. To see what it could mean for your own numbers, try the Labour capital gains tax calculator, which compares Labour’s proposed 28% CGT with what you would owe under today’s bright-line test.

The core mechanics

Labour’s CGT would tax gains on sale — a realisation basis, not an annual valuation — at a flat 28% rate for New Zealand tax resident individuals and entities, and would also tax non-residents on New Zealand-sourced gains. There is no inflation indexation built into the rate.

Tax applies per owner, on their share of the gain. Labour’s own worked example: if two business partners each own 50% of an investment property and it is sold with a net gain of $100,000, each partner pays 28% on their $50,000 share — $14,000 each, not $28,000 split some other way.

What would be taxed

Only two asset classes are in scope, per Labour’s policy document:

• Residential investment property — rentals and holiday homes/baches that are not the family home
• Commercial property

For the detail on what happens with rentals and commercial premises specifically, see Labour’s CGT and property investors.

What would stay untaxed

Labour describes “everything else” as exempt: the family home (including lifestyle blocks), farms, KiwiSaver, shares, business assets, inheritances and gifts, and personal items such as cars, boats, art, furniture and jewellery. The full exempt list, with the sourcing behind each item, is covered in what’s exempt from Labour’s CGT.

The valuation-day start date

Labour’s CGT is explicitly forward-looking, not applied retroactively to gains already made. Every in-scope property gets a value as at 1 July 2027, and only the gain from that date forward is ever taxed — no matter when the property was originally bought. Labour’s Chris Hipkins has drawn a specific distinction here: this is a “valuation date” mechanism, not “grandfathering” of existing assets out of the regime. The full mechanics, including Labour’s own worked example, are in the 1 July 2027 valuation day explained.

How it compares to today’s rules

New Zealand does not currently have a general capital gains tax. The closest existing rule is the bright-line test, which taxes residential property gains at the seller’s marginal income tax rate (10.5%–39%) if sold within 2 years of purchase, and taxes nothing if held longer (subject to intention/dealer rules). Labour’s CGT would work very differently — a flat 28% rate, applied to both residential investment and commercial property, regardless of how long the property was held. Media reporting on Labour’s policy documents describes the bright-line test as being replaced by the CGT, though Labour’s own primary materials do not state this explicitly. See Labour’s CGT vs the bright-line test for the full side-by-side.

Losses, deductions and death

If a sale produces a loss rather than a gain, that loss can be carried forward and used against future capital gains from the same type of asset — it cannot offset salary or other income. Capital improvement costs are deductible from the gain; holding costs such as rates and interest are not. An inheritance is not a taxable event under the proposal — tax is not triggered by someone’s death, only on a later sale.

What still isn’t specified

Labour’s policy document leaves several mechanical details to be worked out later, following the 2019 Tax Working Group’s recommendations: the exact valuation methodology (rateable value, registered valuation, self-assessment, or a hybrid — only “different options” are mentioned), treatment of trusts holding property, treatment of overseas property owned by NZ residents, and compliance/reporting mechanics such as whether there’s a new IR form. IRD is the obvious administering agency but is not named explicitly in Labour’s materials.

Where this sits in the campaign

The election is on 7 November 2026. Labour is the only party to have released a costed, detailed CGT proposal. National, ACT and New Zealand First have not published comprehensive 2026 tax-policy documents and have generally opposed new capital or wealth taxes; the Greens have proposed a different mix (a wealth tax and an extended bright-line test, not a flat-rate CGT); Te Pāti Māori has proposed income-tax and wealth-tax changes with some figures of uncertain vintage. See the full neutral comparison of every party’s 2026 tax policy for the detail on each.

Estimate your own number

The Labour capital gains tax calculator lets you enter a property’s expected value and sale price and see the estimated CGT under Labour’s proposal side by side with what you’d owe under today’s bright-line test — including the “if enacted as announced” caveats that apply to any pre-election policy.