SYDNEY, May 12 (Reuters) – Australia’s centre-left Labor government will pare tax breaks for landlords to level the playing field for young Australians to own a home, in the biggest housing tax changes this century.
Here are the changes to capital gains tax (CGT) and negative gearing Treasurer Jim Chalmers is proposing in the federal budget on Tuesday.
** From July 1, 2027, the government will scrap the 50% capital gains tax discount on assets held for more than a year and return to the pre-1999 policy of taxing inflation-indexed gains, with a 30% minimum tax on net capital gains. These changes will apply to all CGT assets, held by individuals, trusts and partnerships.
** For existing investments, transitional arrangements will ensure the changes only apply to gains arising on or after July 1, 2027. The 50% CGT discount will continue to apply to gains arising before July 1, 2027.
** Investors in new residential properties will be able to choose either the 50% CGT discount, or cost base indexation and the minimum tax.
** The government will limit negative gearing for residential property, which allows investment losses to be offset against taxable income, to new builds to help boost housing supply.
** From July 1, 2027, losses from established residential properties will only be deductible against rental income or the capital gains from residential properties.
** Properties purchased after 730pm AEST on May 12, 2026 and before June 30, 2027 may be able to be negatively geared during this period, but not in subsequent years. Properties acquired before the date will be exempt from the changes until disposed of.
** Eligible new builds will be exempt from the changes, to help increase housing stock. Properties in widely held trusts and superannuation funds will be excluded, alongside targeted exemptions for build-to-rent developments and private investors supporting government housing programs.
** Apart from changes to negative gearing and capital gains tax, the government will introduce a 30% minimum tax on discretionary trusts from July 1, 2028.
The number of discretionary trusts has more than doubled in the past 20 years, with the wealthiest 10% of households holding over 90% of the value of private trusts, the majority of which are discretionary trusts.
(Reporting by Stella Qiu; Editing by Sam Holmes)
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