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Updated February 27, 2026 — 9:54am,first published 9:52am
Investors could be hit with a restriction on the number of homes they could negatively gear as the government looks at capping the practice to two rental properties each.
Government sources have confirmed to this masthead that the Albanese government has asked Treasury to model changes to negative gearing rules amid rising pressure to find savings and raise revenue ahead of the federal budget in May.
Health Minister Mark Butler would not weigh in on how seriously the reform was being considered but did not rule it out, saying only that the government was committed to levelling the playing field for younger Australians.
“As we head into the 10 weeks leading into the budget, there’s a veritable tsunami of articles speculating about what we might or might not be considering,” he said, appearing alongside Opposition Deputy Leader Jane Hume on Sunrise on Friday morning.
“We’ve been very clear about our tax policies. We’ve been clear about our housing policies … but we’ve also been clear that we think there is an issue around young Australians ... breaking into the housing system.”
Negative gearing allows an investor to deduct any losses from running a property (such as interest, rates and maintenance) from their annual income, reducing how much tax they pay.
The policy change is being considered alongside changes to the capital gains tax discount, which allows investors to sell a property and only pay tax on 50 per cent of the profit if they have owned it for at least one year. The family home is currently exempt from capital gains tax.
Labor moved away from changes to negative gearing and capital gains tax after taking reforms to these deductions to defeats in the 2016 and 2019 elections.
However, as housing affordability has worsened, the government faces renewed pressure to improve the budget bottom line, and Treasurer Jim Chalmers made productivity-boosting reform a centrepiece of his agenda; policies such as winding back capital gains tax discounts and negative gearing are being reconsidered.
The government’s favoured change is to the capital gains tax discount but it will consider restrictions on negative gearing after Treasury provides advice on the probable impacts of these policies.
In an interview with 2GB on Friday morning, Opposition Leader Angus Taylor said it was “highly unlikely” that the Coalition would support changes to negative gearing, accusing Labor of going after working Australians’ money.
“They’re coming after people who have invested over a period of time, often tradies, nurses, all sorts, who have bought investment properties as their nest egg for their future, and in the process, help to get more houses into our country,” he said.
Hume said, “If I’m a landlord and you tax me more, I’m going to push the rents up”.
Asked about the argument that limiting negative gearing – an incentive that allows investors to offset property costs against income – would free up housing supply for first home buyers, Hume said increasing supply by building more homes was the answer.
“We all know that supply is the problem in housing. It’s not how much you’re taxed. And all this… flying of kites around this tax, and that tax – this is just Labor paving the way to increase taxes on Australians,” she said.
Australian Tax Office figures show in the 2021-22 period, 1.3 million people were positively or neutrally geared (meaning they generated more, or equal rental income, compared to their costs), while 950,000 were negatively geared.
Costings requested by the Greens from the Parliamentary Budget Office in 2024 showed that during the 2024-25 period, the revenue foregone from negative gearing was estimated to be about $6.9 billion, while capital gains discounts on residential properties were estimated to cost $5.4 billion.
While some argue that negative gearing has incentivised investment in housing, helping to increase supply and put downward pressure on rents and house prices, others argue the benefits flow disproportionately to wealthier Australians and push property prices higher.
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