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Australia’s government has introduced a bill in parliament to overhaul long-standing property tax concessions and capital gains rules as part of a broader push to improve housing affordability. The proposed reforms include removing the 50% capital gains tax discount on assets held for more than a year and restricting negative gearing benefits to newly built homes from July 2027. The changes have sparked political debate and concern among investors and industry groups, while the government maintains the measures are aimed at helping first-home buyers and increasing new housing supply in one of the world’s least affordable housing markets.
Australia’s government has introduced legislation in parliament to significantly change the country’s property investment tax system, marking one of the biggest tax reform efforts in decades as housing affordability pressures continue to rise. Advertisement
The proposed reforms, which were announced in the federal budget earlier this month, focus on reducing tax incentives that have traditionally encouraged investment in existing residential properties. The measures are expected to reshape the country’s housing investment market if approved by parliament.
Prime Minister Anthony Albanese defended the reforms, stating that the changes are intended to create fairer access to housing for younger Australians and reduce competition between investors and first-home buyers. The proposals, however, have triggered criticism from opposition parties and sections of the property industry, particularly because Albanese had indicated during the 2025 election campaign that housing tax settings would not be altered.
Under the proposed legislation, the government plans to remove the existing 50% discount on capital gains tax for assets held for more than a year. Instead, gains would be adjusted for inflation before taxation. A minimum 30% tax on net capital gains is also proposed from July 2027.
Another major change involves negative gearing, a policy that currently allows investors to offset losses on investment properties against taxable income. The government now intends to limit these benefits only to newly built homes. Officials believe the move could direct more private investment towards new housing supply rather than existing homes, which have seen strong investor demand over the past two decades.
The reforms come as Australia continues to face rising housing costs and limited housing supply across major cities. Official data shows that around one in five Australian households owns at least one investment property apart from their primary residence. Economists and housing experts have often linked generous investor tax concessions with higher property prices and reduced affordability for first-home buyers.
Treasurer Jim Chalmers said the government is continuing consultations with businesses and industry stakeholders on technical aspects of the reforms, including how the capital gains tax changes may affect startups and small businesses.
Chalmers stated that further legislative details could be introduced following consultations where required. He added that the reforms are designed to support existing housing initiatives, preserve investment gains already made by investors, and encourage productive investment into areas such as new housing supply.
Several business groups and industry bodies have urged the government to narrow the scope of the capital gains tax overhaul and exclude sectors outside real estate. Concerns have also been raised about the possible impact on investment activity and long-term capital flows.
The bill has now been introduced in Australia’s lower house of parliament. However, the government does not hold a majority in the Senate, meaning it will require support from crossbench lawmakers for the reforms to become law. The debate around the measures is expected to remain active in the coming months as housing affordability continues to dominate economic and political discussions across the country.
Source Reuters
5th Jun, 2025
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