Greens vow to scrap negative gearing if elected

Any investment properties purchased after the policy commences, or the second and subsequent investment properties already owned, would not be eligible for these concessions, the Greens said.

According to the Greens, the change is needed as current tax concessions make it “easier for a wealthy property investor to buy their fifth or sixth home than a renter to buy their first” and “make property a sought-after target for investors during periods of economic uncertainty”.

The party has said that the property investment incentives have “turbocharged house prices, making it easier for an investor to buy their 10th property than it is for someone to buy their first home”.

Noting global economic upheaval from widespread US tariffs, the Greens said reforms were needed “in order to make housing affordable for renters and first home buyers and help shield first home buyers from the fallout of Trump’s global tariff mayhem”.

Greens Leader Adam Bandt said that these reforms would shift the market dynamics, enabling more than 850,000 renters to become home owners, with an additional $60 billion available over the next decade for housing supply improvements.

“Nothing is more urgent than housing,” Bandt said.

“The Greens will make reforming negative gearing and the capital gains tax discount a priority in the next Parliament, including when there’s a minority government.

“This reform has always been urgent, but the threat of a Trump-fuelled attack on Australian renters and first home buyers in the next few months now makes this a matter of housing life and death. Investors with big money behind them could jump into the housing market because of these incentives and lower interest rates, while first home buyers with their life savings would be priced out of the already overheated market.

“We need to act urgently – within weeks after the election – to protect renters and first home buyers from Trump’s fallout, otherwise the door may be slammed shut forever.”

Max Chandler-Mather, the Greens housing spokesperson, said: “Australia has a choice to make: either we give our children and grandchildren the same chance at home ownership that previous generations had, or we continue to give investors with multiple properties billions of dollars in tax handouts. It can’t be both.”

The Labor and Liberal positions on negative gearing

While the Greens have firmly advocated reform, neither of the two main political parties has backed such a move this time around.

Before the previous federal election (in 2022), the Labor Party had pledged to reform negative gearing and CGT, but this was later abandoned.

Prime Minister Anthony Albanese told journalists on Wednesday that he believed Bandt was just “trying to make himself relevant” with the reform announcement.

Despite asking for modelling on the reforms last year, Treasurer Jim Chalmers has also previously said that negative gearing will not be on the Labor agenda, with the party instead focusing on other housing-related policies like its Help to Buy scheme.

The Liberals have also remained steadfast in their opposition to scrapping negative gearing, saying that it plays a crucial role in ensuring a steady supply of rental properties. Last year, Opposition Leader Peter Dutton “guaranteed” that the Coalition would not make any changes to negative gearing if it won the federal election, saying that removing these tax incentives would lead to higher rents, as investors would need to offset the financial losses incurred from owning rental properties without the tax benefits.

Where do brokers stand on negative gearing?

The broking industry has previously raised significant concerns about the potential economic repercussions of scrapping negative gearing, saying it is ‘playing with fire’.

Speaking to The Adviser last year, Damian Collins, CEO of Momentum Wealth, said that removing this tax incentive could lead to higher rents, as investors would seek to cover their losses by increasing rental prices.

Collins also pointed out that a reduction in investor participation could result in a market correction, potentially destabilising the housing market.

Similarly, Eva Loisance from property finance brokerage Finni echoed these concerns, emphasising that negative gearing is a critical factor in the property market’s stability.

She said that eliminating the incentive could lead to mortgage prisoners – investors who would be unable to refinance or sell their properties under new tax rules – resulting in broader market disruptions.

Alan Hemmings, CEO of Home Loan Experts, has previously suggested a more nuanced approach, recommending that the government consider reducing tax incentives for existing properties while maintaining the current level of support for new builds.

Hemmings believes this strategy could incentivise investment in new housing and help alleviate the housing affordability crisis without drastically impacting the property market.

Last year, analysis from the Parliamentary Budget Office (PBO) – commissioned by Senate crossbenchers David Pocock and Jacqui Lambie – outlined the case for the government to curb concessions for property investors. According to the modeling, these reforms could unlock up to $60 billion over the next decade, which could be directed towards increasing housing supply.

The PBO analysed five policy options, finding that even retaining a 25 per cent CGT discount for new homes and disallowing negative gearing for investment properties could save the government $670 million to 2026–27 and $15.7 billion in the decade to 2033–34.

Scrapping negative gearing altogether, grandfathering the 50 per cent CGT discount to properties bought before 1 July 2024, and limiting it to new properties built after that date could save $9.9 billion over four years and $60 billion in the decade to 2033–34.

Pocock, a key figure in pushing for tax reform, said that while tax changes alone would not solve the housing crisis, they could play a significant role in driving new supply. He stressed the need for all levels of government to pull every available lever to address the growing housing affordability issue.

The analysis from Pocock and Lambie came after the Greens caused long delays to Labor’s key housing bill until the government took action on “tax handouts” like negative gearing and the CGT discount.

However, the party waived through the bills in November after saying that the government would not move on negative gearing.