Glossary · Australian property
Buy and hold.
Long-term property investment strategy where you buy, retain, and rent the asset for 7-15+ years to capture capital growth and CGT 50% discount eligibility. Contrasts with renovate-and-flip.
The mechanic: buy a property with sound fundamentals (rental demand depth, structural growth thesis, fair entry price), rent it for the long-term, hold through cycles. Capital growth compounds over 7-15+ years. Rental yield grows as rents reset to market each lease renewal. CGT 50% discount applies on sale post-12 months (ITAA 1997 s115-25).
Why long-term: AU residential property's structural cashflow yield (3-5% gross net of costs) doesn't beat a balanced ETF over 5 years. The advantage shows up over 10+ years when leverage on equity growth, tax-advantaged structure, and CGT discount compound. Short-hold (under 3 years) typically loses to transaction costs (5-7% buying + 2-3% selling = 7-10% gross drag).
When NOT to buy-and-hold: you have a clear renovate-and-flip thesis (rare and high-skill), the area is in structural decline, you can't sustain the cashflow gap during cycles. The 'just buy and forget' framing oversimplifies. Buy-and-hold still requires 6-monthly maintenance, annual rent reviews, and regular insurance, strata, and rates upkeep.
Worked example
Buy at $700K in 2020. Hold through 2026. Rent rises from $580/wk to $720/wk over 6 years. Property revalues at $920K (3.4% CAGR). Sell at $920K = $220K capital gain × 50% CGT discount × marginal rate = ~$50-70K CGT. Net return after costs: $150-170K plus 6 years of (rent − costs) cashflow.
Source
ITAA 1997 ss115-25 (CGT 50% discount); ATO TR 92/3 (when CGT discount applies).
Related terms
Open the playbook — 11 chapters end-to-end, every threshold cited.