Federal Treasurer Jim Chalmers unveiled sweeping changes to negative gearing and capital gains tax (CGT) as part of the 2026 Budget, a move the government claims will assist 75,000 first-home buyers. The reforms, confirmed by Chalmers, will limit negative gearing to new builds from July next year and replace the 50% CGT discount with inflation-adjusted indexation. The government anticipates these property tax shifts, described as the most significant in 25 years, will moderate housing price growth.
The Coalition has swiftly vowed to repeal these measures should they gain power, positioning themselves for a robust parliamentary and electoral contest. Shadow Treasurer Tim Wilson and Opposition Leader Angus Taylor have labelled the changes "toxic" and pledged to reinstate more favourable rules for property investors and those utilising trusts for tax minimisation. The Greens, meanwhile, are demanding further details, with Leader Larissa Waters indicating her party will negotiate hard before supporting the budget's passage.
Read More: Australia Budget 2026: Tax Changes Affect Home Buyers
Prime Minister Anthony Albanese, during a heated Question Time, accused the opposition of being "reduced to a farce" while defending the government's budget strategy. This parliamentary friction saw two Liberal MPs ejected. Albanese’s government faces scrutiny over claims of broken promises, particularly concerning housing tax commitments made before the last election. Chalmers acknowledged a "change of view" on negative gearing but avoided labelling it a broken promise, attributing the shift to recent decisions made amidst ongoing housing affordability pressures.
The budget also introduces a new 'working Australians tax offset' (WATO), expected to provide up to $250 in additional tax relief for workers, on top of previous tax cuts. The Treasurer has framed the budget as "the most important and ambitious in decades," estimating net savings of $26.1 billion, largely from NDIS adjustments, and linking some measures to the "war against Iran" and its impact on global energy prices.
Read More: PM Albanese defends housing tax changes using childhood story
Background Murmurs
The budget’s fiscal strategy, with a projected deficit $45 billion better than initially forecast, aims to balance cost of living relief and tax reform. However, questions persist about the efficacy of the housing tax changes, with Master Builders Australia expressing concern they could lead to fewer homes being built. The budget’s financial projections indicate slower growth than previously anticipated over the next four years. This fiscal approach, while intended to address intergenerational equity, has prompted debate on its long-term impact and the government's ability to navigate inflationary pressures.
