Australia Ends Negative Gearing for New Investor Purchases of Existing Homes
Australia's federal government has announced that negative gearing tax benefits will no longer apply to investor purchases of existing residential homes after Tuesday night, in one of the biggest property tax changes in two decades. New builds remain eligible to encourage construction, and existing investor properties are grandfathered.
Australian Treasurer Jim Chalmers used his fifth federal budget to announce that negative gearing tax benefits will no longer apply to investor purchases of existing residential homes after Tuesday night, the ABC reported. Negative gearing has for decades allowed property investors to deduct losses on rental properties against their other taxable income, a policy widely blamed for inflating prices and locking first-home buyers out of the market.
Under the new framework, new-build purchases remain eligible for negative gearing to support construction supply, and capital gains tax discounts on investment properties have been reduced. Properties already held by investors at the time of the announcement are grandfathered under existing arrangements. The government also lifted the threshold for the new instant-asset write-off for small businesses and held the headline corporate tax rate.
Opposition leaders said the change breaks an earlier Labor promise not to alter negative gearing in this parliamentary term and warned of unintended consequences for rental supply. Real estate industry groups predicted near-term softening in investor demand, while housing advocates welcomed the move as the first serious tax-side intervention in housing affordability for years. Treasury modelling published with the budget projects modest gains in home-ownership rates over five years.
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