Labour’s 28% Capital Gains Tax Explained for Hamilton Landlords

What the Proposal Actually Says 

Labour's policy covers residential and commercial property. It exempts the family home, farms, shares, business assets and inherited property. Every in-scope property would receive an opening value on 1 July 2027, and you would pay 28% on the gain above that figure when you sell. The tax is paid on sale, not each year, and capital losses could be carried forward, but only against future property gains. 

Here is the maths for an example Dinsdale rental valued at $700,000 on valuation day. These are illustrative, not forecasts. 

Valuation Day Is the Unanswered Question 

My legal training pulls me straight to this gap. Labour has said owners would have five years to obtain a valuation as at 1 July 2027. It has not said which valuation methods would count, whether you could contest one, or what happens if you miss the window. Those details are promised after the election on 7 November. 

Pro Tip: Do not pay for a formal valuation yet. Wait until the accepted methods are confirmed, and keep your purchase paperwork, renovation invoices and rental records in one place in the meantime. 

The Other Parties Decide the Outcome 

National proposes no new property taxes. The Greens propose a 2% annual rent cap and a 10-year bright-line test. Labour would leave interest deductibility alone, and it has been 100% deductible again since 1 April 2025.  

Today's bright-line test taxes your gain at your marginal rate if you sell within two years of buying. One tax adviser view is that Labour's capital gains tax has the best chance of surviving coalition talks if Labour governs with the Greens, so the final shape depends on who negotiates what. 

What Hamilton Sellers Face Today 

Selling now is a pricing decision more than a tax decision, so look at current conditions. The OCR rose to 2.75% on 2 September, its second increase in two months, which matters if your cash flow is tight. 

When Selling Makes Sense and When Holding Does 

I would consider selling if you were already planning to exit, if you need the capital, or if rising rates have squeezed your cash flow. I would consider holding if the rent covers your costs, you expect growth beyond 2027 and the return still works after a 28% tax on that growth. I have seen investors act on a tax headline before running their own numbers, and it rarely ends well. 

Pro Tip: Ask your accountant to model your property under three outcomes: no capital gains tax, Labour's 28% from 1 July 2027, and a 10-year bright-line test. Then compare each with your selling costs today.  

If you want to know what your Hamilton rental would sell for today, reach out and we can start with a sales appraisal. WRE has one of Waikato's largest investor and buyer databases, and our commission is a flat 2.9%+GST. No pressure, no obligation.