The federal government’s planned changes to negative gearing and capital gains tax (CGT) continue to spark debate, with critics warning of impacts on property investment while supporters argue the reforms will help improve housing affordability and create a fairer market for first-home buyers.
The changes, announced in the May federal budget, have drawn strong opposition from some property investors and industry groups, who claim the measures could contribute to a slowdown in the housing market. Others, however, say the reforms are overdue and necessary to reduce tax incentives that have long favored investment properties over owner-occupiers.
New research by the e61 Institute has added fresh insight to the debate, analysing data from approximately 920,000 property investments made between 2008 and 2025. The study found that the overall impact on investors may be less severe than some public commentary has suggested.
Under the proposed reforms, the current 50 per cent capital gains tax discount for individuals will be replaced by an inflation-based adjustment system similar to the one that existed before 1999. The government also plans to introduce a minimum tax rate of 30 per cent on capital gains, aimed at reducing incentives for investors to time property sales around periods of lower taxable income.
In addition, negative gearing will be restricted to newly built properties. However, existing owners who purchased investment properties before the budget announcement on May 12, 2026, will continue to be able to claim deductions for property investment losses under existing arrangements.
The policy changes are scheduled to take effect from July 1 next year.
The study suggests the effects of the reforms will vary significantly depending on individual investment circumstances, property type, and ownership structure, rather than producing a uniform outcome across the market.
The housing tax reforms remain a key part of the government’s broader strategy to address housing affordability, increase housing supply, and reshape investment incentives within Australia’s property market. As implementation approaches, economists, investors, and housing advocates will continue to closely monitor how the changes affect both property investment and home ownership opportunities.
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