Australia to curb property tax breaks in bid to help first homebuyers

Australia’s centre-left Labor government moved to curb two of the tax settings that have long underpinned property investing, a bid to tilt the housing market back toward younger buyers shut out by high prices and scarce supply.

Treasurer Jim Chalmers proposed limiting negative gearing on residential property to new builds and overhauling the capital-gains tax discount. Under the plan, the current 50% discount on assets held for more than a year would be scrapped from July 1, 2027, and replaced with inflation-indexed gains plus a 30% minimum tax on net capital gains. The change would apply to CGT assets held by individuals, trusts and partnerships, with transitional rules protecting gains made before the start date.

The government also said losses from established residential properties would only be deductible against rental income or gains from residential property, while new builds would be exempt in an attempt to steer money into extra supply. That makes the policy more than a tax adjustment: it is an explicit push to shift the balance away from investors and toward first-home buyers who have struggled to keep pace with prices.

Timing will matter. Properties acquired after 7:30 p.m. AEST on May 12, 2026 and before June 30, 2027 may still be negatively geared during the transition, which creates a narrow window for buyers and investors to act before the new rules bite. That detail is likely to shape behavior across the market, encouraging some investors to pull forward purchases while leaving others to reassess whether the after-tax return still justifies the risk.

The broader test for Labor is whether curbing investor perks will actually improve access for younger Australians or simply reshuffle incentives within an already strained market. If investor demand eases, price growth could cool at the margin, but the changes could also alter rental economics if landlords try to pass on higher costs or reduce buying altogether. Politically, the move raises the stakes in a housing fight that reaches deep into household wealth, because any shift that threatens the tax treatment of property owners risks angering Australians who have built a large share of their wealth through residential real estate.