Labour's CGT: What Property Investors Should Know

Election proposal, not current law. Nothing below applies to your rental or commercial property today. Labour’s capital gains tax (CGT) would only take effect if Labour is elected on 7 November 2026 and legislates the policy afterwards. For the full mechanics of the proposal, start with Labour’s capital gains tax explained.

If you own a rental, a holiday home that isn’t your main residence, or commercial premises, Labour’s CGT proposal is squarely aimed at you — this is the group Labour’s policy document is most explicit about.

What’s in scope for property investors

Two categories only:

• Residential investment property — includes rentals and holiday homes/baches, but not your family home
• Commercial property

Everything else you might own alongside these — your own home, farmland, shares, KiwiSaver — stays out of scope. See what’s exempt from Labour’s CGT for the complete list.

How the gain is calculated

Net gain = sale price − (purchase price, or the 1 July 2027 valuation if you already owned the property by then) − eligible deductions. Only capital improvement costs are deductible; holding costs like rates and interest are not, following the 2019 Tax Working Group’s recommendations.

Labour’s own worked example shows how this plays out for a property bought after the valuation date: buy for $1,000,000 on 1 July 2027, spend $100,000 on improvements, sell for $1,100,000 on 1 July 2028 — no tax owed, because the entire sale-price increase is exactly matched by the improvement spend.

The 1 July 2027 baseline

For a property you already own before 1 July 2027, the taxable gain would be measured from a valuation taken as at that date, not from your original purchase price — so gains made before then would not be taxed. For a property bought after 1 July 2027, your purchase price is the baseline instead. The full mechanics — including Labour’s own commercial-property worked example — are covered in the 1 July 2027 valuation day explained.

Per-owner, not per-property

If you co-own a property — with a partner, family member, or business associate — the tax would apply to each owner’s individual share of the gain, taxed separately at 28%. Labour’s own example: two partners with a 50/50 share of a $100,000 gain would each pay 28% on their $50,000 share ($14,000 each), rather than the gain being taxed once at the property level.

Losses are ring-fenced

Selling for less than your cost base (including improvements) creates a capital loss. That loss can be carried forward to offset future gains from the same asset type — property — but not against your salary, wages, or other income. This mirrors how bright-line losses work under today’s rules.

What happens to your CGT liability if a co-owner dies

An inheritance is not a taxable event under the proposal — no tax is triggered at the point of death, and on a surviving spouse’s death the property is revalued at the point of transfer to the executor or children. If sold within six months of that revaluation at the same price, no further gain (and so no tax) arises on the sale itself.

How this compares with what you’d pay today

Right now, without a general CGT, a property investor’s exposure is the bright-line test: if you sell within 2 years of purchase, the entire gain is added to your income and taxed at your marginal rate (10.5%–39%); beyond 2 years, no bright-line tax applies (subject to intention/dealer rules for people who buy and sell as a business). Labour’s flat 28% would replace that time-limited exposure with a rate that applies regardless of how long you’ve held the property. The full comparison is in Labour’s CGT vs the bright-line test.

Run your own numbers

Use the Labour capital gains tax calculator to estimate what a specific rental or commercial sale would look like under Labour’s proposed 28% rate, compared with your current-law bright-line exposure.