The NSW government has warned that generous capital gains tax (CGT) rules push up property prices and make housing less affordable. Officials say the 50% CGT discount benefits wealthy investors over first-time homebuyers. NSW Treasury told a federal parliamentary inquiry the tax break, along with negative gearing, "skew incentives towards property investment" and harm policies meant to help first-timers. The CGT discount costs the federal budget about $23 billion each year, with $8.7 billion from NSW alone. It lowers the effective tax rate on capital gains, letting investors bid higher on properties. The discount applies to investments held over 12 months and was introduced in 1999 by the Howard government. NSW officials showed lending to investors has soared—from about $13 billion in the 1990s to $139 billion by 2025—while first home buyer lending only rose from $10 billion to $64 billion. This large tax break mostly helps the wealthy and distorts the housing market. Greens treasury spokesperson Nick McKim said, "The CGT discount pushes up house prices, rewards speculation, and funnels billions to wealthy investors while everyday Australians get left behind." Federal Treasurer Jim Chalmers has so far rejected changing CGT or negative gearing. The Property Council of Australia warned that cutting CGT alone would not solve housing issues and may reduce new home building and raise rents. The inquiry on CGT, led by Greens, will hold public hearings and report by March 17.