Labour's capital gains tax proposal explained (not law)

This is a proposal, not law. Labour campaigned at the 2026 election on a 28% tax on profits made after 1 July 2027 from selling residential or commercial property, with the family home and farms excluded and every dollar raised to go to health. The gain would be measured from the higher of your purchase price and the property's value on 1 July 2027. The election on 7 November 2026 has produced preliminary results only; official results are due 27 November 2026 and no government has been formed. We explain what Labour has published, what it has not, and how it would sit beside today's bright-line test, without judging it. Rules checked 10 November 2026.

Status: a campaign proposal, not law

Not law. Nothing in this guide is current tax law. Today, the only general tax on residential property gains is the 2-year bright-line test, plus the intention and dealer rules.

Labour's capital gains tax exists as a party policy: its capital gains tax page and a release of 28 October 2025. For it to become law, a government would need to introduce a bill and Parliament would need to pass it. As at 10 November 2026, no government has been formed, so none of that has happened.

This guide describes the proposal neutrally. It does not say whether the proposal is good or bad, and it does not predict the election outcome. It is general information, not tax or financial advice.

What Labour has published (not law)

These are the features on Labour's own page and in its release:

1News (18 October 2026) reports that the family home exclusion would use the existing bright-line main home test, which our main home exclusion guide explains. That detail is not on Labour's page.

How it would work, using Labour's own examples (not law)

The core calculation is the sale price less the base value, with the tax at 28% of any gain. Labour's page gives three examples. The tax figures below come from running them through the model behind our election 2026 calculator:

The higher-of rule is what keeps gains made before 1 July 2027 out. In the commercial example, $200,000 of the rise happened before the start date and is not taxed; only the $100,000 after it is.

The rate is flat. Unlike a bright-line gain, which is added to your income and taxed at your marginal rate, the proposal sets 28% whatever your other income.

What Labour has not published

Not law. Where Labour's page is silent, the details below are either reported by others or unknown.

• Holding costs. 1News reports that rates and mortgage interest could not be deducted (reported, 18 October 2026).
• Inflation. 1News reports no inflation adjustment (reported).
• Losses. Deloitte reports that losses could be carried forward only against future property gains (reported, 17 August 2026).
• Transfers. 1News reports that transfers between spouses or partners, relationship property and transfers on death would be excluded (reported).
• The bright-line test. Labour has not said whether the 2-year test would stay alongside the new tax.
• Purchase and selling costs. Labour's examples use the sale price less the base value only; whether legal and agent fees would be deducted is not stated.
• Owner-occupied business premises. National argues these would be taxed; Labour says businesses are exempt. This is unresolved.
• Interest deductibility. Sources disagree on whether Labour has ruled out restoring limits on mortgage interest deductions for rentals.
• Collection. How and when the tax would be paid, and how co-owners, trusts and companies would be treated, are not set out.

Our election calculator lists the assumptions it makes on each of these points, so its figures are illustrations, not forecasts.

How it would compare with the bright-line test

The bright-line test is current law. Labour's tax is a proposal. Side by side:

One property, three sale dates

Take a rental bought on 2 March 2026 for $700,000 (title registered that day), with a rateable value of $720,000 at 1 July 2027 and an owner with $90,000 of other income. We show the two side by side and do not combine them, because Labour has not said how they would interact. Bright-line figures use 2026/27 rates for later years and ignore costs:

The middle row is the open question: whether both taxes could apply to the same sale, or one would replace the other, has not been published.

Revenue and the health spending (not law)

Labour says every dollar raised would be ring-fenced for healthcare, funding three free doctor's visits a year for all New Zealanders.

Labour's capital gains tax page and its October 2025 release do not give a revenue figure. 1News reports Labour's estimate as an average of about $700 million a year: $100 million in 2027/28, rising to $1.35 billion a year from 2030, based on a 2019 Tax Working Group model (reported, 18 October 2026). Coverage of Labour's fiscal plan gives other year-by-year figures; we have not read the plan itself.

Where the election stands

The general election was held on 7 November 2026. On the preliminary count, Parliament has 131 seats, so 66 are needed for a majority. Official results are due on 27 November 2026, and special votes can change seat numbers. No government has been formed.

The three parties that oppose a capital gains tax, National, ACT and NZ First, hold 67 of the 131 seats on the preliminary count. The future of the proposal depends on which government is formed after the official results. We will update this guide when that happens; the Electoral Commission's results site has the count.

Other parties' positions

In alphabetical order. "Reported" means the detail comes from news or commentary, not a party document we read.

• ACT. Campaigned on "no new taxes" (reported by Deloitte). Older ACT releases call for the bright-line test to be scrapped; whether that is a 2026 commitment is not confirmed. ACT also proposes a 12-month tax exemption for qualifying personal digital assets (reported), covered in our crypto tax guide.
• Green Party. No capital gains tax. Proposes restoring a 10-year bright-line test with the family home exempt, reinstating interest deduction limits for residential investors, a 2.5% wealth tax on net assets over $10 million and a tax on large inheritances and gifts (reported by Deloitte and 1News).
• National. Committed to "no new taxes" if re-elected. Christopher Luxon said National is not introducing a capital gains tax (RNZ, 23 August 2026). National argues Labour's tax would apply to owner-occupied business premises.
• NZ First. No 2026 capital gains tax document found. Winston Peters criticised Labour's 2025 announcement (reported by 1News), and NZ First opposed a capital gains tax in the 2017 to 2020 term.
• Opportunity (TOP). No capital gains tax. Proposes an annual land value tax of 1.75%, reduced to 0.5% for rural land. TOP's published bottom lines did not include the land value tax (reported by 1News).
• Te Pāti Māori. No capital gains tax or bright-line change found. Proposes a wealth tax from $2 million of net wealth, a 5% stamp duty on residential sales with first home buyers under $1 million exempt, and land banking and vacant homes taxes (reported).

Our election 2026 page compares every party's property tax settings in one table and lets you model a sale under Labour's proposal beside current law.

Questions people ask

Is Labour's capital gains tax law?

No. It is a 2026 campaign proposal. The election results are preliminary, official results are due 27 November 2026, and no government has been formed.

Would my family home be taxed under Labour's proposal?

Labour says the family home, including lifestyle blocks, would be excluded. 1News reports it would use the existing bright-line main home test.

Would gains made before 1 July 2027 be taxed?

Not under the proposal as published. The gain would be measured from the higher of your purchase price and the value on 1 July 2027, by default the rateable value.

Would the bright-line test still apply?

Labour has not said. Today the 2-year bright-line test is law; whether it would stay alongside a capital gains tax is not published.

What rate would apply?

A flat 28% on the gain, the same as the company tax rate, rather than your marginal income tax rate.