Australia Treasurer Jim Chalmers Considers Tax Rule Changes for Property Investors Before May Budget

The Australian government is looking at changing tax rules for property investors. This could affect how many properties people can claim tax losses on.
By Newsroom | Finance, Australia |

Australian Treasurer Jim Chalmers has acknowledged that his department has explored potential adjustments to tax rules affecting property investors, particularly concerning negative gearing and capital gains tax discounts. These considerations come as the government faces pressure to address a significant housing crisis and increase the availability of homes, especially for younger Australians.

The issue of negative gearing, a tax concession that allows property investors to deduct investment property losses against their other income, has become a focal point. Alongside this, the capital gains tax (CGT) discount, which reduces the taxable profit on assets held for over 12 months, is also under review. Reports suggest that modeling has been conducted on limiting these benefits, with specific attention paid to restricting the number of properties an individual can negatively gear.

While Chalmers has stated that the government's primary focus remains on increasing housing supply, his confirmations of Treasury's modeling work have fueled speculation about impending policy shifts. The timing of these discussions, particularly ahead of the May federal budget, indicates a potential for significant policy announcements.

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Timeline of Discussions and Statements

The public discussion and official acknowledgments regarding potential changes to negative gearing and capital gains tax concessions have occurred over several months:

  • September 2024: Treasurer Jim Chalmers confirmed he asked the Treasury to model the impacts of changes to negative gearing and capital gains tax (CGT) concessions. He also stated that this type of work was not unusual for a treasurer. During this period, Chalmers also hedged on questions regarding the origin of Treasury modeling on tax concessions for property investors.

  • August 2025: Trade unions, through ACTU secretary Sally McManus, publicly called for restrictions on negative gearing and the CGT discount, suggesting a limit of one investment property for tax benefits. Chalmers at this time did not rule out "drastic change" for property owners.

  • February 2026: Reports emerged that Treasury was modeling rules to limit negative gearing to two investment properties. Chalmers confirmed that changes were being examined ahead of the May federal budget.

Actors and Positions

Multiple groups have voiced opinions and demands concerning negative gearing and CGT:

  • The Government (led by Treasurer Jim Chalmers):

  • Has commissioned Treasury to model potential changes to negative gearing and CGT.

  • States the primary focus is on boosting housing supply.

  • Has not definitively ruled out reforms to negative gearing and CGT, leaving the door "ajar" or "open."

  • Suggests that any changes would need to assist, not hinder, housing supply.

  • The Greens:

  • Advocate for limiting negative gearing and the CGT discount to one investment property.

  • Believe these concessions allow investors to outbid ordinary Australians and young people.

  • Trade Unions (e.g., ACTU):

  • Have also called for restricting negative gearing and the CGT discount to one investment property.

  • Sally McManus has expressed the view that action is necessary to allow young people to eventually own a home.

  • Opposition (e.g., Liberal leader Angus Taylor):

  • Has stated that changes to negative gearing would not help Australians into homeownership and could increase rents.

Evidence of Treasury Modeling

Jim Chalmers has confirmed that his department has conducted modeling on potential changes to negative gearing and capital gains tax concessions.

  • September 27, 2024: Chalmers conceded he asked Treasury to model the impact of these changes. He characterized this as "not unusual" for a treasurer seeking advice on various proposals in the public domain.

  • February 27, 2026: Reports indicated that Treasury was modeling rules that would limit negative gearing to two investment properties. Chalmers confirmed that changes were being examined ahead of the May federal budget.

Conflicting Views on Impact

There are differing perspectives on the potential effects of modifying negative gearing and CGT rules:

Arguments for Reform

Proponents of reform, such as the Greens and some unions, argue that these tax concessions distort the housing market and hinder first-home buyers.

  • These policies allow investors to outbid ordinary Australians, particularly impacting younger generations and first-home buyers.

  • Limiting these concessions is seen as a necessary step to help more people "have a roof over their head."

  • The argument is that restrictions are needed to prevent a situation where young people are unable to ever own a home.

Arguments Against Reform

Opponents, including some in the Liberal party, contend that such changes would not address the housing crisis and could have negative consequences.

  • Changes to negative gearing would not help Australians own homes and could lead to higher rents.

  • The government's stated "North Star" remains building more houses.

Government's Stance: Balancing Supply and Tax Policy

Treasurer Jim Chalmers has consistently linked any potential tax adjustments to the overarching goal of increasing housing supply.

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  • While acknowledging the examination of negative gearing and CGT reforms, Chalmers emphasizes that the government's primary focus is on boosting housing supply.

  • He has stated that the door remains "ajar" to adjusting negative gearing, provided it helps, rather than hinders, supply.

  • The government is willing to "seek advice on the various proposals that are in the public domain" due to the "acuity of the housing crisis."

Expert Analysis

While direct expert quotes from the provided text are limited, the analysis points to the sensitivity and complexity of these tax policies. The modelling itself suggests a structured approach by the Treasury to understand potential economic implications. The varied public stances from political parties and interest groups indicate that any policy decision will likely face significant debate.

The capital gains tax discount is a key element, allowing investors to pay tax on only half of their profit if an asset is held for over 12 months. This, combined with negative gearing, offers substantial financial benefits to property investors, contributing to their ability to purchase multiple properties.

Conclusion and Implications

The evidence indicates that the Australian government, under Treasurer Jim Chalmers, is actively exploring potential modifications to negative gearing and capital gains tax rules. This exploration involves detailed modeling by the Treasury.

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  • The government's stated intention is to address the housing crisis, with a declared primary focus on increasing housing supply.

  • However, the confirmation of tax policy modeling and the refusal to definitively rule out changes suggest that reforms to investor tax concessions are a serious consideration, particularly ahead of the May federal budget.

  • The proposals under consideration, such as limiting negative gearing to a specific number of properties, are politically sensitive and have drawn strong opinions from various stakeholders, including opposition parties, Greens, and trade unions.

  • The debate centers on whether these tax measures help or hinder housing affordability and accessibility for ordinary Australians, especially first-home buyers. The implication is that policy decisions made in the upcoming budget could significantly alter the investment landscape for Australian property.

Sources Used

Frequently Asked Questions

Q: Why is the Australian Treasurer looking at changing tax rules for property investors?
The government is looking at changes to tax rules like negative gearing and capital gains tax to help with the housing crisis and make more homes available, especially for younger people.
Q: What specific tax rules are being considered for change in Australia?
The government is looking at negative gearing, which lets investors deduct losses from rental properties, and the capital gains tax discount, which lowers tax on profits from selling assets.
Q: What has Treasurer Jim Chalmers said about these potential tax rule changes?
Jim Chalmers confirmed that his department has modeled potential changes, including limiting the number of properties an investor can negatively gear. He stated the main focus is on building more houses but has not ruled out tax reforms.
Q: When might these changes to property investor tax rules happen in Australia?
These discussions and modeling are happening before the May federal budget. This suggests that policy announcements about changes to negative gearing and capital gains tax could be made then.
Q: Who wants changes to negative gearing and capital gains tax in Australia?
Groups like The Greens and trade unions have called for limits on negative gearing and the capital gains tax discount, suggesting investors should only benefit from one property. They believe this will help young people buy homes.
Q: What are the arguments against changing negative gearing and capital gains tax rules?
Opponents argue that changing these tax rules will not help people buy homes and could even make rents go up. They believe the government should focus only on building more houses to solve the housing crisis.