The Government's tabled legislation removes provisions that would have applied new tax rules to transactions dating back to 12 December 2006, following strong industry advocacy.
Property Council Chief Executive Mike Zorbas said the decision was a win for investor certainty and sound tax policy.
"This policy pivot is a win for commonsense. Australia relies on long-term investment to build homes, infrastructure and the assets that support economic growth," he said.
"Applying new tax rules to transactions completed two decades ago would have spooked the international investors we need to help build tomorrow's Australia."
The legislation also expands Australia's foreign resident CGT regime through expansion of the definition of "real property", to effectively include many infrastructure and energy assets.
The Property Council consistently supports measures that protect the integrity of Australia's tax system and raised concerns during consultation about the retrospective application of the original proposal.
"Global capital is highly mobile and Australia competes with other markets every day for investment.
"Tax policy certainty matters because investment decisions made today shape the homes, jobs and infrastructure of future generations."
The Property Council will continue to engage with Government to ensure the remaining reforms are implemented in a practical manner without creating unnecessary compliance burdens or discouraging investment into Australian property, infrastructure and housing.
