Interest Rates and Capital Gains: What Property Investors Need to Know
A Snapshot: Interest Rates and Capital Gains Insights for Property Investors
As interest rates continue to rise and capital gains tax (CGT) laws evolve, property investors need to stay across a shifting Australian real estate landscape. The Reserve Bank of Australia's recent decision to lift the cash rate has added pressure to property owners, increasing the overall cost of holding investment properties. Coupled with ongoing discussions around CGT reforms, these factors are reshaping investor strategies and landlord decisions across the country.
Interest Rates on the Rise
The Reserve Bank of Australia raised the cash rate by 25 basis points at its first meeting of 2026, bringing it to 3.85%. The decision followed a December Consumer Price Index (CPI) reading of 3.8% year-on-year, signalling that inflation remains a key concern for the central bank.
For property investors, the rate rise means higher mortgage repayments and a tighter margin between rental income and holding costs — making cost management more important than ever.
Vacancy Remains Tight
National vacancy rates edged up only slightly to 1.4% in December 2025. Demand for rental properties remains strong across most markets, pointing to a competitive environment for tenants and continued pressure on rental supply. For landlords, low vacancy is broadly positive, though it also raises questions about long-term affordability and the sustainability of the current market.
Capital Gains Tax Laws: Proposed Reforms
Under current rules, investors who hold a property for more than 12 months before selling are eligible for a 50% CGT discount. Those who buy, renovate, and sell quickly — commonly referred to as "flipping" — generally don't benefit from this concession.
Proposed reforms to CGT have attracted significant debate, and for good reason. Historically, government social housing programs provided a meaningful share of affordable rental stock. Today, that responsibility has shifted heavily to private investors. If CGT settings are tightened in ways that reduce the attractiveness of property investment, the downstream effects on rental supply could be significant — particularly in markets that are already stretched.
The concern is straightforward: investors are not charities. If the tax environment makes property investment less viable, some will exit the market. Fewer investors means less rental supply, which puts upward pressure on rents. That said, higher rents don't automatically translate to better returns — if capital growth expectations are also dampened, landlords may find themselves running harder just to stand still.
How Rentomise Can Help You
Managing investment property costs is increasingly important in this environment, and Rentomise is a free service that helps landlords do exactly that.
Rather than paying for full-service property management across the board, Rentomise lets you choose which tasks to handle yourself and which to get targeted support from property managers — so you're only paying for the help you actually need.
Some examples of what you can get support with through the platform:
- Finding a tenant and tenant screening
- Rent inspections and rent collection
- Maintenance coordination and compliance checks
- Lease agreements and bond lodgement
Listing tasks for bid is completely free. You can also use Rentomise to get competitive quotes for all-inclusive property management if you'd prefer a full-service arrangement — the platform puts you in control either way.
With the right mix of self-management and professional support, landlords can meaningfully reduce costs, improve cash flow, and keep their investment working harder.
Visit rentomise.com.au to learn more.