Budget preview: Industry waits with bated breath for housing tax changes

While there have been conflicting reports regarding potential changes to the capital gains tax and negative gearing treatment for property investors, there has been no official release from Treasury on what this change could look like. Indeed, Treasurer Jim Chalmers has previously said that negative gearing will not be on the Labor agenda, with the party instead focusing on other housing-related policies like its Help to Buy scheme.

However, Treasurer Chalmers has confirmed that there will be ‘tax reform’ in this budget.

Speaking on Channel 9’s Weekend Today on Sunday (10 May), Chalmers said: “What’s happening in our housing market now, it’s playing out, I think, particularly to disadvantaged younger people, is that the share of owner occupiers over a very long period has come down as the share of investors has gone up. And I think any responsible government needs to acknowledge that. I think that is one of the main concerns and anxieties that people have in our economy.

“And, so we’ve said for some time, there’ll be a tax reform package in the Budget. The details of that will be released on Tuesday night. But people know that we understand there is a legitimate concern about how hard it is for younger people to get into the market, and so the Budget is partly motivated by that.

“There will be a focus in the Budget on the cost of living and particularly on housing… we’ve made it really clear that even though the problem in the housing market begins with supply, it doesn’t end there. As I said, the status quo in the housing market and the tax system is unfair and therefore unacceptable to us. Too many people locked out, not enough homes. And so, overwhelmingly, the government’s focus has been on supply. That’s appropriate, that is the main game.

“But there are additional steps that need to be taken to make the housing market fairer. Too few Australians, and particularly younger Australians, can get a toehold in the housing market. And that means too few people are getting a toehold in the economy more broadly.”

Policy think tanks have long been calling on the government to reduce the 50 per cent capital gains tax (CGT) discount, saying that current settings overcompensate investors for the effects of inflation.

In November 2025, the Senate assembled a select committee to investigate the operation of the capital gains tax discount following pressure from the Greens. The minor party said that the CGT discount fuelled inequality and worsened housing affordability issues. It came after the Albanese government had asked Treasury for advice on possible changes to negative gearing and capital gains tax concessions.

However, members of industry have warned that changing the CGT and negative gearing treatment would be “playing with fire” and could have dire consequences for the property market.

Over the past few days, the Treasurer has unveiled a raft of proposals that will be included in this evening’s budget to accelerate housing supply and support business investment, including:

• An additional $2 billion to build water, power, and road infrastructure to support up to 65,000 more homes (taking total investment to $47 billion in housing).

• Funding to unlock investment in housing, energy, and critical minerals by streamlining environmental approvals.

• Making the $20,000 instant asset write-off for small businesses permanent.

The Treasurer will hand down the Albanese government’s fifth federal budget from Parliament House in Canberra at 7:30pm AEST (7pm ACDT and 5:30pm AWST).

[Related: FBAA warns CGT shake-up will deepen rental pain]