Recently, Treasurer Jim Chalmers handed down the 2025-2026 Federal Budget, the fourth budget of the Albanese Government.

There is a lot to dissect about the budget but in particular, the budget handed down one of the most significant housing reforms in the last couple of decades.

Let’s take a look at what’s in the budget for housing.

Reforms to Negative Gearing

As of the 1st of July 2027, the ability to negatively gear investment properties will be limited only to new builds.

Investors who buy established housing after Budget night (12th of May 2026) will still be able to deduct losses against residential property income. They will be able to carry forward unused losses to future years but won’t be able to deduct them against other income like wages.

Reforms to Capital Gains Tax

The Government will replace the 50 per cent Capital Gains Tax (CGT) discount with a discount based on inflation and introduce a minimum 30 per cent tax on gains from 1 July 2027.

This reform means that investors will only pay tax on their real capital gain. The CGT reforms will only apply to gains arising after 1 July 2027. Investors in new builds will be able to choose the 50 per cent CGT discount or the new arrangements.

Reforms to Discretionary Trusts

The Government will introduce a minimum tax of 30 per cent on discretionary trusts from 1 July 2028 with some exceptions.

Rollover relief will be provided for three years from 1 July 2027 to assist small businesses and others that wish to restructure.

Extending the ban on Foreign Investors

Last year, the Federal Government introduced a ban on Foreign Investors buying existing homes.

The Federal Government will be extending the ban on foreign investors buying existing homes until mid‑2029.

$2 Billion Local Infrastructure Fund

The Government is establishing a new $2 billion Local Infrastructure Fund to help local governments and state utilities build essential infrastructure to support new housing – including by connecting essential services such as water, power, sewerage and roads.

This funding will support up to 65,000 homes over the decade and brings the Government’s total investment in housing‑enabling infrastructure to $6.3 billion.

Source: Federal Government