The Anthony Albanese government recently introduced a bill in Australian parliament that will make the biggest overhaul of tax rules in decades, including scrapping a capital gains discount and curbing tax breaks for property investors in order to boost housing affordability.
The reforms, unveiled in the May 2026 federal budget, have proved unpopular with voters, with the opposition even accusing the Albanese administration of breaking “election promises”. Albanese has defended the tax rule changes as a way to make housing affordability fairer for Australia’s younger demographics, apart from easing investor competition for first-home buyers. However, during his 2025 election campaign, Albanese pledged not to change housing taxes.
“Under the proposals, the centre-left Labour government would cancel a 50% discount on capital gains for assets held over a year, instead taxing inflation-adjusted gains. A 30% minimum tax on net capital gains would be introduced from July 2027,” reported Reuters.
The Albanese government also plans to limit negative gearing to newly built homes to steer capital to the supply chain front, narrowing a rule that lets investors offset property losses against taxable income. Some industry groups and businesses, however, have urged the government to exempt them from the capital gains overhaul and confine changes to real estate.
As Albanese faces scrutiny from the Australian opposition and the real estate industry, Treasurer Jim Chalmers said the government was consulting stakeholders on technical aspects, including capital gains tax treatment for small businesses and startups.
“Where appropriate, these details will be legislated following consultation. These changes build on our existing housing reforms to help level the playing field for first-home buyers, help preserve the gains investors have made and incentivise productive investment in areas like new housing supply,” Chalmers said in a statement.
Tax breaks have lured many to buy investment properties over the last couple of decades, with official data showing one in five Australian households owning another property along with their primary residence. The trend has coincided with a surge in home prices amid supply shortages, making the housing market one of the world’s most unaffordable.