Negative gearing changes on the table before May budget, Jim Chalmers confirms | Tax
Albania’s government has once again opened the door to negative gearing reforms as it weighs potentially sweeping tax changes to raise revenue and help solve the housing crisis.
Treasurer Jim Chalmers confirms changes are being reviewed ahead of May federal budget after reports His department was modeling rules that would limit adverse impacts to two investment properties.
The government is also considering options to roll back the 50% capital gains allowance; That means two policies accused of promoting housing as an investment vehicle for wealthier Australians could soon be overhauled.
Negative gearing allows an investor to reduce their overall tax bill by deducting losses on their properties from their annual income. There is no limit to the number of traits that can be negatively driven.
Sign up: AÜ Breaking News email
Handling a report Australian On Friday, Chalmers said it was “not unusual” for the Treasury to examine options ahead of the budget, but insisted no decision had been taken.
“We are aware of the intergenerational problems in the housing market and the tax system, and we have other policies that will help address this sense of injustice, reducing income taxes, making pensions fairer, increasing the low-income super tax credit and making it easier to save for deposits by building more homes in housing,” the Chancellor of the Exchequer said.
“So those are our tax and housing policies. It’s not unusual this far into the budget for the Treasury to consider other options… any steps in that direction will be a matter for the cabinet as always.”
Two separate government sources confirmed the move was being reviewed but emphasized that internal discussions were not that far along, ignoring reports about two property lines.
Former Labor leader Bill Shorten unsuccessfully introduced changes to negative gearing and capital gains tax relief in the 2016 and 2019 elections, before the Albanian opposition scrapped the policies ahead of the 2022 election.
The Treasury modeled changes to negative gearing rules in 2024 but the government chose not to pursue them before the 2025 election and instead focus on policies to increase the supply of new homes.
However, as expectations grew that the 12 May budget would include some changes, pressure continued to intensify, including from within the Labor Party, to rethink its position.
Opposition leader Angus Taylor said it was “pretty unlikely” the Coalition would support rolling back negative gearing, or capital gains tax relief.
“The starting point here is that we need more homes and putting a new tax on homes is not the way to get more homes,” he told 2GB. “This is where we start.”
Taylor’s former party room colleague Keith Wolahan argued this week that the Liberals should consider changes to negative gearing as part of a strategy to become the “party of first home buyers”.
The Greens, who have been campaigning for years to roll back the concessions, welcomed the news that changes were on the table.
“Unfair tax breaks are making houses more expensive and making billions for super-wealthy property investors,” said the Greens’ housing spokeswoman, Barbara Pocock. “Ending these tax concessions will help more people keep a roof over their heads.
“Massive tax cuts for wealthy property investors are cooking our housing system. Negative gearing and capital gains tax relief are allowing cashed-out investors to outbid Australians every day, and it’s young people and first home buyers who are paying the price.”
