Who wins and who loses under Labour’s capital gains tax
 | Author: Kieran Trass Head of Research, Staircase. Property cycle analyst and author of five books on the New Zealand market. |
Labour’s capital gains tax rewards people who hold property and charges people who sell. That is the pattern I found when I tested the policy against its own stated aims in the first Housing Compass report.
Three groups come out ahead and seven carry the cost.
First home buyers land on both sides.
The tax in one paragraph
Labour proposes a flat 28% tax on the gain when the owner sells a residential investment property or a commercial property. Only gains made after 1 July 2027 count. The family home, farms, KiwiSaver, shares, business assets and inheritances are exempt. The gain is not adjusted for inflation. Death is not treated as a sale, so no tax is paid when a property passes to a partner or heirs. Labour says the tax will pay for three free doctor’s visits a year. This is an election proposal, not law.
Who is better off, and who is worse off
Landlords who sell pay tax on inflation
The tax applies to the whole rise in price after 1 July 2027. Some of that rise is just inflation, not a real gain.
Take a rental worth $800,000 on 1 July 2027. If its price only kept pace with 2% inflation for ten years, it would be worth about $975,000. The $175,000 “gain” is all inflation. At 28%, the owner pays about $49,000 in tax on money that bought nothing extra. These figures are an illustration, not a forecast.
Older investors have a reason not to sell
An investor who sells to fund their retirement pays the tax. One who keeps the property until they die pays nothing. That gives older investors a strong reason to hold on, which is the opposite of what Labour says it wants.
2021 peak buyers face an unclear rule
People who bought near the 2021 peak may own properties still worth less than they paid. Labour has described how those owners would be treated in three different ways. Cotality data reported by the NZ Herald on 21 September 2026 put the number of affected properties at about 19,500. The Housing Compass suggests writing a single rule for these owners into the policy document itself, so there is one version rather than three.
Builders and future renters carry a cost
The tax lowers the return on buying or building a new rental. That makes it harder for builders to sell new homes off the plans to investors. If fewer new rentals get built, future renters carry any rent rise. Labour says rents will not go up, but it has not looked at new rentals, which is where any rent effect would come from.
Why the pattern is important
Labour says the tax will move money out of property and pay for three free doctor’s visits a year. A tax that rewards holding works against both aims. Money stays where it is, and the tax only arrives when someone sells.
The Housing Compass tests each of Labour’s claims against the policy as written. It is not a verdict on whether a capital gains tax is right or wrong.
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