The Albanese government has returned to parliament with legislation restricting negative gearing to new residential builds from 2027-28, scrapping the 50 per cent capital gains tax discount in favour of an inflation-adjusted equivalent, and imposing a minimum 30 per cent tax on investment gains from 1 July 2027. Existing property investors are grandfathered under all three measures.
A Labor-led committee has recommended the bills pass. A Labor–Greens deal is the most likely path to the Senate numbers the government needs, but the Greens are withholding support, arguing the grandfathering provisions are too generous to existing property investors and leave the largest portfolios untouched by the reform.
The grandfathering design is the centre of that dispute. An investor who holds multiple properties purchased before the reform cutoff faces no new restriction on gearing and no change to their CGT treatment. The changes apply only to properties acquired after the cutoff date. Every existing investor is fully protected; the new rules apply only to new entrants to the investment property market.
For housing supply, the critical question is not what the legislation says but when it bites. If grandfathering is open-ended, which it is under the current draft, the reform has no impact on the existing housing stock. New-build investment may increase as negative gearing incentives shift toward construction. Whether that produces affordable housing or developer-serviced investment stock is a question the legislation does not resolve.
Neither the government nor the Greens has stated its floor publicly. The Greens have not specified whether they want a cap, a phase-out, or a sunset clause on grandfathering. The government has not disclosed what concessions it is prepared to make.
If negotiations with the Greens fail, the government would need crossbench support, less certain and more fragmented than a Labor–Greens arrangement. No vote date has been set.
