In short:
A study from the e61 Institute has found a narrow majority of housing investors will pay more tax overall under the government's tax changes and 43 per cent will pay less.
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cent → find → less
Researchers analysed data on 920,000 housing investments between 2008 and 2025 to calculate how the changes would have affected them.
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changes → analyse → them
The federal government's changes to the Capital Gains Tax discount and negative gearing take effect on July 1, 2027.
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changes → take → July
The federal government has been accused of causing a property downturn and "breaking promises" in relation to the housing tax changes announced in the May budget.
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government → accuse → budget
Property investors have been some of the most vocal critics, but others say changes to Australia's negative gearing and capital gains tax (CGT) rules are long overdue and are an attempt to give first-home buyers a more "level playing field".
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changes → say → field
Researchers from the e61 Institute have weighed into this debate by analysing data on 920,000 housing investments between 2008 and 2025 and calculating how the tax changes would have affected them.
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changes → weigh → them
Their conclusion is that the impact of the policy changes on investors is "softer than what might be expected from commentary around the reforms".
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what → expect → reforms
Essentially, the 50 per cent discount on the CGT introduced by the Howard government in 1999 will be replaced by a return to the inflation-based deduction that existed prior to that.
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that → introduce → that
A minimum tax rate of 30 per cent will also be applied to capital gains to reduce incentives for asset owners to shift the timing of sales to periods when they have low taxable incomes.
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they → apply → incomes
Negative gearing will only be available on new builds, although owners of properties purchased before 7:30pm on budget night (May 12, 2026) will still be deduct their property investment losses from their wider income.
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owners → purchase → income
The changes will take effect from July 1, next year.
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changes → take → July
Some investors could pay less tax
About 53 per cent of housing investors will pay more tax overall under these changes and 43 per cent will pay less, according to the research.
In regard to the CGT changes, this policy would result in lower tax on 54 per cent of investments, while 42 per cent would have to pay more tax after selling their properties, the authors of the e61 report found.
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authors → pay → report
However, they arrived at a different result in relation to how the new negative gearing rules would affect investments.
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rules → arrive → investments
They argued it would lower rental income tax for 28 per cent of investors, while 49 per cent would have to pay more.
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cent → argue → more
"The new way of taxing CGT is likely to raise more revenue for the budget bottom line, mainly coming from high-return investments," e61 Institute senior research economist and report co-author Elyse Dwyer said.
"
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Dwyer → tax → investments
It ties the tax bill more closely to the actual size of an investor's gain, so small and negative returns are taxed more lightly and large real gains are taxed more heavily.
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gains → tie → gain
"That also brings down the overall riskiness of housing as an investment, because large positive and large negative returns get pulled closer to the middle."
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returns → bring → middle
The e61 analysis also found that investors who were highly leveraged or had "little other taxable income", such as retirees, were most likely to pay higher taxes under the changes.
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who → find → changes
During his budget announcement, Treasurer Jim Chalmers estimated the CGT and negative gearing reforms would result in an extra 75,000 people owning homes over the next decade.
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people → estimate → decade
Treasury forecast there would be about 35,000 fewer homes built, but other taxpayer-funded measures would boost overall supply by about 30,000.
It also estimated the drop in investor demand would see house prices rise by 2 per cent less than they otherwise would over the next few years.
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they → forecast → years
However, the confluence of the tax changes with rising interest rates and increased economic uncertainty has caused many forecasters to be downbeat about the likely path of housing values.
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forecasters → rise → values
HSBC chief economist Paul Bloxham recently forecast house prices could fall by as much as 13 per cent from peak to trough and many other analysts have also tipped double-digit declines.
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analysts → forecast → declines
The Master Builders Association argued they would result in 8,700 fewer homes being built over the next four years, which would be a dent to the government's aim to build 1.2 million homes over a five-year period.
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which → argue → period
The Real Estate Institute was even more pessimistic, estimating 25,000 fewer homes being built over five years.
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Institute → estimate → years
The changes have also been described by Opposition Leader Angus Taylor as an assault on aspiration.
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changes → describe → aspiration
He pledged to repeal them if the Coalition wins the next election.
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Coalition → pledge → election
But Grattan Institute chief executive Aruna Sathanapally said the changes would shift the composition of the housing market in favour of owner-occupiers.
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changes → say → occupiers
Independent economist Saul Eslake has objected to the 30 per cent minimum CGT, but says the overall proposal will improve equity in the tax system by bringing the tax treatment of investment income closer to the tax treatment of wage income.
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proposal → object → income
Peter Varela from ANU's Tax and Transfer Policy Institute, which often collaborates with Treasury, said Australia's arrangements for taxing investment income were "a mess" and that this was "a step in the right direction".
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this → collaborate → direction
The Aporia