Factbox-Australia unveils changes to negative gearing, capital gains tax

SYDNEY, May 12 (Reuters) - Australia's centre-left ‌Labor government will ​pare tax ​breaks for landlords to level the playing field for young Australians to own a home, in the biggest housing tax changes this century.

Here are the ‌changes to capital gains tax (CGT) and negative gearing Treasurer Jim Chalmers is ⁠proposing in the federal budget on Tuesday.

** From July 1, 2027, the government will scrap the 50% capital ‌gains tax discount on assets held ‌for more than a year and return to the pre-1999 policy of taxing inflation-indexed gains, with a 30% minimum tax on net capital gains. These changes will apply ​to all CGT assets, held by individuals, trusts and partnerships.

** For existing investments, transitional arrangements will ensure the changes only apply to gains arising on or after July 1, ⁠2027. The 50% CGT discount will continue to apply to gains arising before July 1, 2027.

** Investors in new residential ​properties will be able to choose either the 50% CGT discount, or cost base indexation and the minimum tax.

** The government will limit ​negative gearing for residential property, which allows investment losses ‌to be offset against taxable income, to new builds to help boost housing supply.

** From July 1, 2027, losses from established residential properties ⁠will only be deductible against rental income or the capital gains from residential properties.

** Properties purchased after 730pm AEST on May 12, 2026 and before June 30, 2027 may be able to be negatively ⁠geared during this period, but not in subsequent years. Properties acquired before the date will be exempt ​from the changes until disposed of.

** Eligible new builds will be exempt from the changes, to help increase housing stock. Properties in widely held trusts and superannuation funds will be excluded, alongside targeted exemptions ‌for build-to-rent developments and private investors supporting government housing programs.

** Apart from changes to negative gearing and capital gains tax, the government will ‌introduce a 30% minimum tax on discretionary trusts from July 1, 2028.

The number of discretionary trusts ⁠has more than doubled in the ‌past 20 years, with the ​wealthiest 10% of households holding over 90% of the value of private trusts, the majority of which are discretionary trusts.

(Reporting by Stella Qiu; Editing by ‌Sam Holmes)

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