Labor's CGT Reforms: What Every Property Owner Must Know

Treasurer Jim Chalmers has introduced sweeping capital gains and negative gearing changes to parliament — here's what buyers and investors need to know.

On Thursday 28 May 2026, Treasurer Jim Chalmers introduced Labor's long-awaited capital gains tax (CGT) and negative gearing reform legislation to the House of Representatives. ABC News reports the bill marks the first significant overhaul of property investment taxation in more than two decades — and the clock is already ticking on passage, with a Senate inquiry due to report by 22 June and parliament rising for the winter break on 2 July.

The stakes for property buyers, investors, and anyone renting in Australia could not be higher.

What's in the Bill

The centrepiece of the legislation is a shift from the current flat 50 per cent CGT discount — available on assets held for more than 12 months — to a new inflation-adjusted system. Under the proposed framework, the purchase price (the "cost base") is indexed for inflation over the time you hold the asset. Only the "real" gain above that inflation-adjusted figure attracts the discount, rather than simply halving the entire nominal gain.

The bill also contains curbs to negative gearing for property investors, alongside a $250 tax cut for wage earners and a $1,000 universal deduction for work-related expenses. Notably, the thorny details of how capital gains on start-ups and small businesses will be taxed have been deferred to future legislation, with the treasurer confirming he is still consulting with "small and start-up businesses."

Mr Chalmers said the laws would overturn "more than two decades of a distorted tax system" that had fuelled property price growth, adding: "There's no point having a ladder if the first few rungs are missing."

How It Affects Property Investors

For investment property owners, the shift to inflation-adjusted cost bases is the critical change. Because the cost base is adjusted for inflation before the discount is calculated, investors who purchased properties at lower prices decades ago may face a higher effective tax on the nominal gain they have accumulated, compared to the current flat 50 per cent discount model.

Reserve Bank of Australia research cited in the ABC News coverage shows property investment in Australia has become increasingly skewed toward higher-income households and is dominated by baby boomers — suggesting this cohort will feel the changes most acutely when they eventually come to sell.

Critically, existing investments are expected to be carved out, meaning properties already held at the time the laws pass should retain their current tax treatment. New investments would fall under the new regime.

If you're an investor wanting to model how changes in your after-tax cash flow might affect your loan strategy, our [refinance savings calculator](/calculators/refinance-savings) can help you run the numbers. Our [investor home loan hub](/home-loans/investor) also has current comparison data if you're reviewing your lending setup.

What the Negative Gearing Changes Mean

The Greens, who have long called for outright abolition of negative gearing, have indicated via senators Larissa Waters and Nick McKim that they are willing to let the bill pass quickly, subject to the Senate inquiry concluding 22 June. Labor can pass the bill with Greens support alone. Senator McKim said the Greens would "use this inquiry to examine how and why Labor decided to leave in place the vast majority of tax handouts for the ultra-wealthy" — but a Greens source told ABC News the party was "not inclined to help the Coalition drag out the legislative process."

The Coalition is pushing for a months-long inquiry. Independent Allegra Spender told ABC's 7.30 program her concerns centred on "the taxation of nominal and real gains ... and income smoothing," arguing that "if you don't get tax reform right, you will not bring people with you."

Small businesses with turnover under $2 million, the vast majority, already access an additional 50 per cent CGT discount in certain circumstances under existing law — and Labor does not propose to change that. Lobby group COSBOA has pushed for a larger turnover threshold, and the government appears open to considering it.

What This Means for First-Home Buyers

The government argues that curbing investor demand will cool the market and improve access for owner-occupiers. The counterargument, put by those critical of the package, is that fewer investors means fewer rental properties at a time when vacancy rates are near record lows — pushing rents higher and leaving fewer funds available for tenants to save deposits.

The current landscape is already punishing for aspiring buyers. The average deposit savings time in Australia has stretched to over 11 years. The budget does not directly address the supply shortage that underpins prices. For anyone trying to break into the market, careful planning is essential.

Check your options through our [first-home buyer hub](/home-loans/first-home-buyer), and use our [borrowing power calculator](/calculators/borrowing-power) to understand how your current financial position lines up with realistic loan amounts — before any market movements play out.

What to Do Right Now

The most important rule: don't restructure investments based on legislation that hasn't yet passed. Amendments remain possible, and the start-up and small business provisions are explicitly deferred to a second bill.

Key points to hold in mind:

- **Existing properties** are expected to retain their current tax treatment under grandfathering provisions. - **The Senate inquiry** concludes 22 June, with a vote before 2 July being the government's stated goal. - **Negative gearing and start-up details** are still being finalised — get qualified tax advice before making any changes to your investment structure. - **RBA data confirms** the market is skewed toward wealthier, older investors — meaning reform effects will play out unevenly across the market.

For anyone reviewing their mortgage and investment strategy against this backdrop, speaking with both a mortgage broker and a tax adviser is the most productive use of your time right now. If you're considering refinancing existing investment loans, explore what's available through our [refinance hub](/home-loans/refinance).

*ABC News reports the legislation was introduced to the lower house on Thursday 28 May 2026 by Treasurer Jim Chalmers. Read the [full ABC News coverage](https://www.abc.net.au/news/2026-05-28/greens-likely-to-play-ball-with-labor-capital-gains-timeline/106732096) for more detail.*