Capital growth
The increase in an asset's value over time, which becomes a taxable gain only when you sell.
Capital growth is the rise in what your property or shares are worth. Unlike rent or dividends, it produces no cash while you hold the asset and is not taxed until you dispose of it.
That deferral is a genuine advantage. Growth compounds untaxed for as long as you hold, and when you finally sell after more than twelve months, the CGT discount halves the gain you declare.
Growth is also the entire justification for negative gearing. If a property does not appreciate by more than the losses you funded along the way, the strategy has failed regardless of the tax deductions collected.
Growth versus yield over a decade
A property bought at $600,000 growing 5% a year is worth about $977,000 after ten years. That $377,000 gain is untaxed until sale, and then only half is declared if held beyond twelve months.
The bit people get wrong
Median price growth for a suburb is not your growth. Your specific property, its condition, and what you paid all determine your result — buying above market means starting behind the median.
Common questions
Is capital growth taxed each year?
No. Growth is unrealised until you sell. Only when a CGT event occurs does the gain enter your taxable income, which is what makes long-term holding tax-efficient.
What drives property capital growth?
Land scarcity, population growth, infrastructure, employment, and credit conditions. Land appreciates while buildings depreciate, which is why land content matters so much.
Can I access growth without selling?
Yes, by borrowing against the increased equity. That converts growth into usable funds without triggering CGT, though it does add debt and risk.
Run your own numbers