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.<\/p>\n
The treasurer, Jim Chalmers, confirmed that changes were being examined in the lead-up to the May federal budget after reports<\/a> his department was modelling rules that would limit negative gearing to two investment properties.<\/p>\n 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.<\/p>\n 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.<\/p>\n Sign up: AU Breaking News email<\/a><\/p>\n Addressing a report in The Australian<\/a> on Friday, Chalmers said it was \u201cnot unusual\u201d for the Treasury to be examining options before a budget but stressed that no decision had been made.<\/p>\n \u201cWe are alive, obviously, to the intergenerational issues in the housing market and in the tax system, and we\u2019ve 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,\u201d the treasurer said.<\/p>\n \u201cSo those are our policies on tax and on housing. It\u2019s not unusual this far out from the budget that the Treasury would be considering other options \u2026 any further steps along those lines would be a matter for cabinet in the usual way.\u201d<\/p>\n 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.<\/p>\n 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<\/a> the policies in the lead-up to the 2022 ballot.<\/p>\n 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.<\/p>\n 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.<\/p>\n