What are the key changes to negative gearing and Capital Gains Tax (CGT) announced by the Australian Government?

The government is restricting negative gearing exclusively to new residential builds and replacing the 50% CGT discount with a model that taxes real gains adjusted for inflation. While new rules apply to assets acquired from budget night 2026, the full transition will not take effect until July 1, 2027.

How does the NDIS legislation affect the timing of these tax reforms?

The federal government is prioritising $37.8 billion in NDIS savings measures to reduce the national deficit, which has pushed the implementation of tax changes further down the legislative calendar.

What does "grandfathering" mean for investors who already own property?

Under the proposed policy, all assets geared or acquired before budget night will be exempt from the new rules, a practice known as grandfathering. This means current investors can maintain their existing tax benefits and 50% CGT discounts for as long as they hold those specific assets.

How will the new Capital Gains Tax (CGT) model work compared to the current 50% discount?

The government plans to scrap the standard 50% discount for assets held longer than 12 months, returning to a pre-1999 model where tax is applied to real gains. This means investors will adjust their initial purchase price for inflation over the life of the investment and pay tax only on the profit above that indexed value.

Why is the government targeting short-term rentals like Airbnb?

The government aims to curb the "corporatised business model" of short-term rentals to encourage investors to return properties to the long-term rental market. By removing negative gearing benefits for existing properties—which many Airbnbs are—the policy seeks to increase housing stock for permanent residents.

What is the projected impact of these tax changes on Australian house prices?

Economists, including analysts from Barrenjoey, estimate that the CGT and negative gearing changes could cause national house prices to decline by approximately 4%. This is considered a potential win for first-home buyers but a risk for those holding highly leveraged portfolios.

Labor prioritises NDIS cuts over housing tax reform

Written by Liezl GambePublished May. 11 2026Last Updated May. 11 2026

The Albanese Government is prioritising a legislative blitz to rein in the National Disability Insurance Scheme, positioning the scheme’s sustainability ahead of contentious tax changes in a high-stakes federal budget.

By fast-tracking $37.8 billion in NDIS savings, the government aims to shave $45 billion off the cumulative deficit over five years.

The fiscal tightening is a prerequisite for reaching a surplus, which remains a distant decade away.

Legislation to enforce a reduced growth rate must pass by June 30 to secure the projected $15 billion in annual savings by 2030, leaving the opposition with limited time for scrutiny.

This urgent legislative window has forced a delay in the implementation of landmark changes to capital gains tax and negative gearing.

While new rules will apply to assets acquired from budget night, the actual transition will not commence until July 1, 2027.

Under the plan, Labor will ditch the standard 50% CGT discount for an inflation-adjusted model and restrict negative gearing to new builds, effectively grandfathering existing investments.

While the property sector warns of supply shortages, the hotel industry has welcomed the move, arguing it dismantles the "corporatised business model" of short-term rentals like Airbnb.

Despite breaking a key election promise, Prime Minister Anthony Albanese signalled the pivot was necessary to address "intergenerational equity" and the growing frustration of Australians locked out of the property market.