Prime Minister Anthony Albanese announced plans to limit negative gearing and reduce capital gains tax discounts in the 2026 federal budget [1, 2].
These changes mark a significant reversal of a pre-election promise made by the Labor government before the 2025 election [2, 3]. The policy shift targets the intersection of tax law and housing affordability, which has become a central point of political contention in Australia.
According to government plans, the restrictions on negative gearing will apply specifically to newly purchased investment homes [2]. This measure is designed to shift the housing market toward owner-occupiers and increase the overall supply of new housing [3, 4]. Additionally, the budget will include a reduction to the capital gains tax discount [1, 2].
During the last election campaign, Albanese said a number of times that there would be no changes to either negative gearing or the capital gains tax discount [1]. However, the 2026 budget proposes these limits on established homes bought after budget night [2].
The government said the moves are intended to make the tax system fairer [3, 4]. By curbing the ability of investors to offset rental losses against other income, the administration aims to reduce the competitive advantage investors have over first-time homebuyers.
The budget is delivered today, May 11, 2026, in Canberra [1, 2].
“The government plans to limit negative gearing on newly-purchased investment homes.”
This policy reversal represents a high-stakes gamble for the Albanese government. By breaking a specific campaign pledge to protect negative gearing and capital gains tax discounts, the administration is prioritizing long-term housing market correction and fiscal fairness over short-term political consistency. The success of this move depends on whether the resulting increase in housing supply for owner-occupiers outweighs the political backlash from property investors.
