How will homebuyers benefit from the 2026 federal budget

Federal Treasurer Jim Chalmers on Tuesday night delivered the Albanese government’s fifth budget, which he described as “very ambitious” as it includes sweeping changes to negative gearing and capital gains tax. 

“The Budget includes the most significant tax reform package in more than a quarter of the century,” the Treasurer said during his speech at Parliament House in Canberra.

Dr Chalmers said the Budget aimed at “rebalancing a system” where house prices have decoupled from incomes, which have made it difficult for younger Australians to enter the property market. 

Here’s what Australians hoping to get their foot onto the property can expect from the 2026 federal budget. 

Negative gearing restrictions

The 2026 federal budget is set to scale back two major tax breaks that have long favoured property investors. 

From July 2027, negative gearing for residential property will be limited to new builds only, removing tax advantages for investors purchasing established homes. 

However, existing investors will continue to retain the tax advantage until they sell the asset. 

The current negative gearing tax concessions allow investors to offset property losses against other income, such as wages. 

The policy’s intended effect appears to be curbing investor demand for existing homes while encouraging new housing supply.

Capital gains tax overhaul

At the same time, the 50% CGT discount will be replaced with inflation-adjusted indexation, aimed at ensuring tax is paid on real capital gains rather than nominal price growth.

New builds will have the option of using the existing 50% discount, or the new method. 

The government will also introduce a minimum 30% tax rate on capital gains from July next year, with the same minimum rate applying to discretionary trusts from the following year. 

The changes will apply prospectively, with existing investments protected under transitional arrangements.

According to Treasury modelling, the combined reforms (negative gearing and CGT) are expected to help around 75,000 Australians achieve home ownership. 

Dr Chalmers said revenues expected to be generated from these changes will fund a new round of tax relief for 13 million Australian workers. 

$47b record investment in housing

The 2026 federal budget commits to lifting total federal investment in housing to a record $47 billion.

$2 billion on infrastructure to support housing developments

An additional $2 billion will be spent on essential infrastructure such as roads, power and drainage to unlock new housing developments. 

Dr Chalmers said this investment would support the construction of around 65,000 new homes over the next decade. 

“We’re working with states to cut red tape and planning delays which could unlock tens of thousands more,” Dr Chalmers said. 

5% deposit scheme

First‑home buyers will continue to benefit from 5% deposit schemes, helping eligible buyers enter the market sooner without paying lenders mortgage insurance.

Extended ban on foreign investors 

The budget also extends the ban on foreign investors purchasing existing homes, a move designed to ease demand pressures, while funding measures to address youth housing insecurity and homelessness.

The Albanese government aims to secure homes for 4,000 young people at risk of homelessness.

“Australia’s longstanding housing shortage is making homes unaffordable,” Dr Chalmers said.

“This challenge hits young workers and families hard and we’re addressing it from every responsible angle.”