Albanese Government Overhauls Property Taxes in 2026 Federal Budget

Treasurer Jim Chalmers delivered the 2026-27 federal budget on May 12, centering on a structural overhaul of the property tax regime to address intergenerational inequality. The government will restrict negative gearing concessions to newly built properties and replace the 50 per cent capital gains tax (CGT) discount with an inflation-indexed model and a minimum 30 per cent tax rate. These changes, effective July 1, 2027, apply to assets acquired after budget night, while existing investors are grandfathered. Prime Minister Anthony Albanese defended the move as necessary for social cohesion, despite having previously ruled out such changes before the 2025 election.

To support first-home buyers, the government established a $2 billion Local Infrastructure Fund to facilitate the construction of 65,000 new homes. Cost-of-living relief includes a $250 Working Australians Tax Offset and a $1,000 instant tax deduction for workers. However, the budget implements significant cuts to the National Disability Insurance Scheme (NDIS), aiming to save approximately $37.8 billion by reducing participants to 600,000 by 2030.

Other measures include a $53 billion boost to defense spending over a decade and a $14.8 billion fuel resilience package prompted by conflict in the Middle East. The Coalition condemned the reforms as a "war on aspiration," while the Greens and disability advocates criticized the budget for protecting wealthy investors while slashing essential supports. Real estate industry leaders warned that reducing investor incentives could shrink rental supply and increase rents.