Record-level wealth has accumulated in properties across the globe. But accessing that wealth has become a pricey proposition. Capital gains taxes increasingly burden homeowners and investors, dissuading many from selling and contributing to the stagnation of global property markets.
One in 12 U.S. sellers now pay capital gains tax on profits from selling a primary residence — that’s a seven-percentage point jump from the early 2010s, according to Cotality analysis. In Australia, it’s investors who pay capital gains taxes, and there these taxes are poised to rise materially as policies are revised next year.
These taxes have had a hand in slowing global markets. U.S. homeowners hold onto property for an average of 11.9 years. In Australia, that figure is 9 years.
Ten years ago, those numbers were 9.6 and 8.4 years, respectively.
Midway to the goal
The housing market remains a focal point in the U.S. as mid-term elections approach. Both sides of the aisle support tax breaks for homeowners who realize net proceeds of $1 million or less. The line of thinking points to larger tax breaks incentivizing sales.
According to Cotality data, adjusting tax thresholds is one way to move markets.
In the U.S., adjusting the current $500,000 tax exclusion set in 1997 to $1,000,000 would reduce the number of homeowners paying property gains taxes by nearly three-quarters. That means millions of homeowners would be free to collect their profits, invest in new homes, and turn over their old properties to new homeowners.
“Housing ties up over one-quarter of American wealth. For those under 40, it’s over a third of their net worth,” said Archana Pradhan, principal economist at Cotality. “While equity gains have stabilized the U.S. economy, it also means that taxes can consume a larger share of someone’s net wealth. That reality gives people pause before they sell.”
The long game
There is a direct link between the size of realized equity gains and homeownership periods.
Cotality data show that in the U.S., as the share of sales exceeding the current $500,000 tax exemption set in 1997 climbed, so did the average length of time someone owned a home.
Tracking the relationship between homeownership and capital gains taxes
Data source: Cotality, 2026
People can hold onto homes to avoid triggering tax and financing penalties. Some entirely circumvent capital gains taxes in the U.S. by using inheritance to transition ownership.
Cotality analysis showed that a record 7% of all property transfers came through inheritance. In California, where 25% of homes sold require owners to pay capital gains taxes, homes are inherited at twice the rate seen in the rest of the country.
This approach further stymies market movement. When natural housing turnover stalls, choice is limited, profits remain unrealized, and people’s finances and market demands can diverge.
Australia’s interest in investment
The pattern of high taxes deterring home sales is a part of the Australian market conversation as well. Already, the length of time people own a home has increased, but new taxation laws are positioned to push those numbers higher.
Recently, the Australian government revised the rules for home investors. Now, instead of receiving a 50% discount on the marginal tax rate for profits realized when selling, gains will be taxed using a CPI indexation method.
“There is widespread speculation that these changes will act as disincentive for investment activity across Australian housing,” said Tim Lawless, Cotality’s Head of Research in Australia. “It may also incentivize investors holding onto their properties for longer.”
The affordability gap in Australia has been widening for years and slowing the traditional trade-up cycle. Homeowners in the country hold their properties for an average of nine years, but it's not because no one wants to buy a home. In a recent survey from Cotality, 75% of Aussie buyers said they are willing to reduce spending and accept the highest interest rates of any country surveyed.
If investors start to feel the squeeze and respond by holding onto their properties for longer, that could further limit available inventor across an already tightly supplied market.
The ones who pay the price will be the homeowners whose budgets are already under strain.
Step up on the ladder
Homeownership is an increasingly expensive proposition. Elevated interest rates and ballooning insurance costs and taxes — from both property taxes and capital gains — have coincided with decreasing application volumes. Cotality data shows that when interest rates moved from 4.5% in January 2019 to 6.9% in January 2025, lenders wrote almost 1 million fewer loans.
Still, would-be buyers are trying to make homeownership work. In Cotality’s recent survey of recent and future homebuyers, it is clear that there is an order in which people are willing to make sacrifices to own a home.
The sacrifice ladder goes lifestyle and time first, structure of the deal second, structure of the house last.
What homebuyers will do to make homeownership work
Data source: Cotality consumer sentiment survey, 2026
Unsticking the market
People who want to own a home are doing more with less. In New Zealand, buyers are taking out smaller mortgages. In Australia, the remedy is to reduce lifestyle spending. In the U.S. buyers are willing to bend at nearly every point.
What they are trying to preserve is liquidity.
Capital gains taxes have a direct line to liquidity. They are also highly individual. People’s readiness to sell doesn’t always move with the market. Understanding exactly where home prices have pushed homeowners across the capital gains threshold is where the conversation starts. The next step is providing a trusted model forward.
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