Albanese Plans 2026 Federal Budget Tax Changes for Investors

Federal budget tax changes are set to make property less attractive to new investors as the Albanese government prepares a 2026 budget that recasts housing as shelter rather than a financial tool. Existing property investors would keep grandfather provisions, leaving the biggest effect on future buyers who have used tax settings to compete for homes.

Michael Fotheringham on first-home buyers

Since 2020, investors have lifted their share of new home loans from less than 30% to more than 40%, according to Australian Bureau of Statistics data. Owner-occupier levels have fallen over the same period, and Michael Fotheringham, managing director of the Australian Housing and Urban Research Institute, said the policy balance has shifted too far toward investors.

“It has become easier to buy a second, third or fourth home than it is to buy your first home – that’s a problematic policy setting.”

The government plans to change negative gearing and capital gains tax in a way that would make property less appealing to new investors. The Howard-era 50% capital gains tax discount is one of the incentives being discussed, and the reforms are aimed at changing the return profile for people buying additional properties rather than a first home.

Grandfathering and investor choices

Existing property investors would be protected by grandfather provisions, so the immediate pressure falls on future purchases. That splits the market into two groups: people already holding investment property, and new entrants who would face tighter tax settings on the next deal.

Predictions of a market collapse or an explosion in rents rest on the assumption of a mass exodus of investors. If sellers do exit, the properties would go back on the market and be bought by another investor or an owner-occupier, which limits the idea that the same home simply disappears from supply.

The policy is being framed as part of a broader move away from treating housing mainly as a financial asset, with housing shortages and poor planning by state and federal governments also part of the backdrop. For a first-home buyer, the practical shift is narrower but clearer: the tax advantage for competing with investors would be reduced if the budget lands as planned.