The Albanese government has again opened the door to reforms to negative gearing as it weighs up potentially sweeping tax changes to raise revenue and help address the housing crisis.

The treasurer, Jim Chalmers, confirmed that changes were being examined in the lead-up to the May federal budget after reports his department was modelling rules that would limit negative gearing to two investment properties.

The government is also mulling options to wind back the 50% capital gains discount, meaning the two policies blamed for promoting housing as an investment vehicle for wealthier Australians could soon be overhauled.

Negative gearing allows an investor to deduct losses from their property from their annual income, reducing their overall tax bill. There is no limit on the number of properties that can be negatively geared.

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Addressing a report in The Australian on Friday, Chalmers said it was “not unusual” for the Treasury to be examining options before a budget but stressed that no decision had been made.

“We are alive, obviously, to the intergenerational issues in the housing market and in the tax system, and we’ve got other policies to help address that sense of unfairness, cutting income taxes, making superannuation fairer, boosting the low-income super tax offset and, in housing, building more homes and making it easier to save for a deposit,” the treasurer said.

“So those are our policies on tax and on housing. It’s not unusual this far out from the budget that the Treasury would be considering other options … any further steps along those lines would be a matter for cabinet in the usual way.”

Two separate government sources confirmed that negative gearing was under review but played down reports about the two-property limit, insisting that the internal deliberations were not that far progressed.

The former Labor leader Bill Shorten took changes to negative gearing and capital gains tax discount to the failed 2016 and 2019 elections, before the Albanese opposition jettisoned the policies in the lead-up to the 2022 ballot.

The Treasury modelled changes to negative gearing rules in 2024 but the government chose not to pursue them before the 2025 election, focusing instead on policies to increase the supply of new housing.

But pressure to rethink its position has continued to intensify, including from within the Labor movement, with expectations growing that the 12 May budget will include some changes.

The opposition leader, Angus Taylor, said it was “highly unlikely” the Coalition would support winding back either negative gearing or the capital gains tax discount.

“The starting point here is we need more houses, and whacking another tax on houses is not the way to get more houses,” he told 2GB. “That’s where we start from.”

Taylor’s former party room colleague Keith Wolahan this week argued that the Liberals should consider changes to negative gearing as part of a strategy to become the “party for first home buyers”.

The Greens, who have campaigned for years to wind back the concessions, welcomed the news that changes are on the table.

“Unfair tax discounts just make housing more expensive and give billions to super-wealthy property investors,” said the Greens housing spokesperson, Barbara Pocock. “Ending these tax concessions will help more people have a roof over their head.

“Massive tax breaks for wealthy property investors are cooking our housing system. Negative gearing and the capital gains tax discount let cashed-up investors outbid everyday Australians – and young people and first home buyers are the ones paying the price.”