Comparing Labour’s Capital Gains Tax (CGT) Proposal With the Minor Parties’ Alternatives

Here at Kiwi Edition we look at what each policy would actually tax, when the tax is effective and therefore what it could mean for property owners.

(sourced on 10 August 2026 ahead of the 7 November 2026 election)

Capital Gains Tax is Back on the Table

With the 2026 general election set for the 7th November, Labour has put a capital gains tax at the centre of its policy platform — a proposal New Zealand has flirted with before but never actually tested at the ballot box. The policy would replace the existing bright-line test with a flat 28% tax on gains made from selling residential investment property and commercial property.

The tax would apply from 1 July 2027, and owners would need to establish a valuation of their property as at that date. Only gains made after the valuation date would be taxed, so equity already built up is effectively grandfathered in.

The family home, farms, KiwiSaver, shares and business assets would all remain outside the tax. The key difference from the bright-line test is that there would be no time limit: sell an investment property one year after the valuation date or twenty years after, the 28% rate would still apply to whatever gain has accrued in the meantime.

Labour has said every dollar raised would be ring-fenced for health spending, funding a proposed “Medicard” scheme that would give every New Zealander three free GP visits a year.

A correction worth making: TOP isn’t proposing a Wealth Tax

It’s worth pausing on the premise here, because the policy landscape has shifted.

For the 2026 election, The Opportunities Party is not running a wealth tax. Its headline policy, called “Tax Reset,” rests on three pillars instead: a Citizen’s Income of $19,400 a year for most adults, a Land Value Tax of 1.75% on urban land and 0.5% on rural land, and a compulsory “KiwiSaver 2.0” that would eventually take 12% of gross earnings, split evenly between employer and employee.

TOP’s founder, Gareth Morgan, did once champion something closer to a wealth tax: a Comprehensive Capital Tax that deemed all capital — including owner-occupied housing — to earn a notional annual return, and taxed that deemed return. That idea shaped the party’s early identity but hasn’t survived into its current platform.

The party actually proposing a wealth tax this election is the Green Party: a 2.5% annual tax on net assets above $10 million, with the family home exempt, paired with income tax cuts for most earners and a new inheritance tax on estates over $1 million.

So there are really three distinct mechanisms in play this election, and they’re worth telling apart because each one taxes something fundamentally different.

Three Different Tax Options

A capital gains tax, as Labour has proposed it, taxes a gain. The bill only arrives when an asset is sold, and only on the profit made since the valuation date. Nothing is owed while the asset is simply held, no matter how much it appreciates on paper.

A wealth tax, as the Greens have proposed it, taxes a stock of net worth above a threshold, assessed every year whether or not anything was sold or produced income. An owner whose asset value rises on paper pays every year, even if that wealth is illiquid.

A land value tax, as TOP has proposed it, taxes an input — the unimproved value of land itself — annually, regardless of what’s built on it or whether it’s ever sold. It doesn’t touch buildings, business assets or shares at all, and unlike a CGT, it applies whether or not the land ever changes hands.

Side-by-Side Comparison

As noted in the table above, the Capital Gains Tax is only paid on the gains from a sale; whereas the Wealth Tax and Land Value Tax are calculated and due annually regardless of a sale.

What it would mean for property owners and investors

For anyone holding, or thinking about holding, an investment property, the mechanics matter as much as the headline rate.

Labour’s CGT only bites at the point of sale, so it wouldn’t affect cash flow while a property is held — but it would change the after-tax return calculation when the time comes to sell, and could encourage owners to hold longer to defer the tax bill. That “lock-in” effect has been observed wherever realisation-based capital gains taxes exist, including in Australia and the United States.

TOP’s Land Value Tax works differently: it is a recurring holding cost, independent of income or sale. Proponents argue it discourages land-banking and large property portfolios, and project it could bring house prices down 10–15% over time. Critics point out it falls hardest on people who are “land rich, cash poor” sauch as retirees and farmers in particular — which is why TOP’s policy includes deferrals and reduced rates for those groups.

The Greens’ wealth tax, meanwhile, would apply to net worth above $10 million across all asset classes, not just property. For highly leveraged property investors with substantial equity but limited cash flow, an annual liability based on paper net worth could create a mismatch between wealth on the balance sheet and cash available to pay the tax bill — though at that threshold, it would touch a very small number of households. The Greens’ talk about this being a tax for the “super rich” however it will affect a lot of businesses and investment funds that own property and therefore that could easily end up as higher prices for everyday products and lower investment returns within our KiwiSaver funds.

These are all just proposals, but if there is a Labour led government then you would assume that these would become a reality in some form. Te Pāti Māori just say they will “make sure the wealthiest pay their fair share” but there is no detail available, so we would assume that they would push for something similar.

Still Just Proposals

None of this is law, and none of it will be unless the numbers fall the right way on 7 November. Labour, the Greens and TOP would each need to negotiate their policies into a governing arrangement, and coalition talks have a long history of reshaping campaign promises in New Zealand.

For now, these are policies to watch rather than to plan around — but given how much they diverge in what they tax and when, it’s worth understanding the difference before the noise of the campaign makes them sound interchangeable.

If you are considering any of these parties then you want to consider the impact that these types of policies might have to your own properties (home and any investments) as well as any exposure that your KiwiSaver or other investments might have within the property market. How would you manage if your home dropped in value by 10-15% as suggested?

There are also associated risks that often are not considered:

The last time the Labour Party were in government they stopped property investors being able to claim interest as an expense. This meant that many of the mum’s and dad’s that had a rental property could not afford to pay the additional tax that this created and ended up selling their investment. The knock on effect was that there ended up with less rental properties and therefore rents increased.

With so many more properties being sold, the property prices have dropped and many new home owners have been struggling with low or negative equity. It’s had a huge financial and emotional impact on many young families.

Those are just two of the potentially unintended issues that we’ve seen in recent years, and many families have still not had a chance to recover from this as the New Zealand economy has struggled with the increased debt too.