Australia Labor Government Reverses Tax Promises on Property

Prime Minister Anthony Albanese and his Labor government are reversing previous election promises by limiting negative gearing and altering capital gains tax rules.

These changes represent a significant shift in federal fiscal policy that affects property investors and the broader housing market. The reversal has triggered backlash from investors and political commentators who argue the government broke its word to voters.

Under the new plan, negative gearing deductions will be limited exclusively to new-build investment properties ^[1]. Additionally, the government will replace the existing 50% capital gains tax discount with a discount indexed to inflation ^[1]. These measures are scheduled to take effect starting in July 2027 ^[1].

Government officials said the reforms are designed to improve intergenerational equity and promote social cohesion. The administration also said the need to address ongoing budget pressures was a primary driver for the overhaul [2, 3].

Critics have reacted to the policy shift. Andrew Bolt, a host at Sky News, described the move as a betrayal of the electorate.

"What this Albanese government did by slashing the capital gains tax discount and negative gearing after repeatedly promising not to at the last election was to steal your power as a voter," Bolt said. "This was a crime against democracy."

The policy reversal follows a period where the Labor government had reportedly committed to maintaining these tax advantages during the last election cycle ^[4]. The shift toward inflation-indexed discounts for capital gains is intended to modernize the tax system, though it removes the flat 50% reduction previously available to long-term asset holders ^[1].