Australian PM Albanese defends negative gearing and capital gains tax changes

Australian Prime Minister Anthony Albanese defended the federal budget's two most contentious items at the Victorian Labor Party conference in Melbourne: structural change to the negative gearing (loss deduction) framework and the gradual narrowing of the capital gains tax (CGT) exemption. Albanese said 'this old structure that blocks first home buyers' access to the market has deepened intergenerational inequality for years; the reform will increase tax revenue by AUD 4.2 billion annually in the medium term'.

The Albanese government will from 1 July limit the right of second-home owners to deduct losses from property income at 50 per cent and remove the CGT exemption from properties held longer than 12 months. Opposition Leader Sussan Ley said on X 'the Albanese government is loading hidden tax increases onto the middle class; this is not reform but a new fiscal burden'. Property Investment Professionals of Australia (PIPA) Chair Nicola McDougall warned 'the changes may create short-term tightening in the rental market; small property investors will be the most affected category'.

RBA Governor Michele Bullock said in an interview with Reuters that 'we will comprehensively assess the potential impact of the budget measures on inflation at our June meeting'. Australia's 10-year bond yield slipped 4 basis points on the news. ABS March data had showed housing starts down 8.4 per cent year-on-year; the structural supply debate will be the central agenda item ahead of the September election. Investment decisions are not personal financial advice.