Will Scrapping Property Investor Tax Breaks Fix Australia’s Housing Crisis?

In what’s being described as an explosive move, the Australian Council of Trade Unions (ACTU) has come out swinging against property tax concessions, backing reforms that could fundamentally change the way investors approach real estate in this country.

They propose to limit negative gearing and capital gains tax (CGT) discounts to just one investment property per person, with all existing arrangements “grandfathered” for five years.

Now, this is a bold stance.

And if it ever became law, it would send shockwaves through the property market and broader economy.

But will it really make housing more affordable, or is this another political distraction?

Let’s look at this in more detail.

The Union’s argument: housing affordability at breaking point

The ACTU, representing nearly two million workers, argues that the current tax system unfairly benefits wealthier Australians with multiple investment properties.

According to Secretary Sally McManus:

• Workers are being priced out of living near their jobs.

• Young Australians are locked out of home ownership and locked into high rents.

• Tax breaks encourage speculative investment in housing rather than directing capital into more productive areas of the economy.

From the union’s perspective, restricting tax benefits to one property will “level the playing field” and take some of the heat out of rising property values.

The reality check: will this really help?

It’s easy to see the appeal of this idea, especially when housing affordability is at the forefront of national debate.

But removing or winding back negative gearing and CGT concessions isn’t the silver bullet many think it is.

Here’s why:

1. It doesn’t fix the root problem: supply.
   Australia simply hasn’t built enough homes to meet demand. Tax changes might dampen investor activity at the margin, but without increasing the number of well-located dwellings, affordability won’t improve in a meaningful way.

2. Investors don’t just buy houses, they provide rental stock.
   If tax incentives are removed or limited, many investors will simply bow out. Fewer investors mean fewer rental properties, pushing rents even higher. This is the opposite of what renters need right now.

3. Markets adjust in unexpected ways.
   Past history (remember when Labor proposed a similar policy in 2019?) shows that these kinds of reforms can spook investors, drag on construction activity, and ripple through the broader economy.

What the ACTU wants beyond housing

To be fair, the union’s proposals go well beyond property.

They’re calling for:

• A 25% minimum tax rate on individuals earning over $1 million.

• The same 25% tax rate on family trusts.

• Replacing the Petroleum Resource Rent Tax with a 25% LNG export levy.

• A cap on fuel tax credits for big companies at $20 million.

• Giving super funds greater flexibility to invest in housing.

• Faster approvals for modular housing and green energy projects.

This is a sweeping reform package, clearly designed to pressure the Albanese government ahead of the Economic Reform Roundtable later this month.

My take: a risky distraction from the real solution

Yes, inequality is real. Yes, housing affordability is broken. And yes, tax breaks disproportionately benefit those already better off.

But we need to be honest: Australia doesn’t have a demand problem, it has a supply problem.

• We need more homes built, and built faster.

• We need planning reform to unlock well-located land.

• We need to incentivise the private sector, super funds, and government to work together to deliver more housing supply—not penalise those already providing rental stock.

Restricting tax incentives may feel like a “fair” solution, but it risks shrinking the pool of rental accommodation, worsening the very affordability crisis it’s trying to solve.

The bottom line

Housing affordability isn’t just about tax settings, it’s about decades of underbuilding, poor planning, and political unwillingness to address supply constraints.

The ACTU’s proposals will get headlines.

They may even get traction with voters who feel shut out of the housing market.

But in practice, they’re unlikely to deliver the affordability outcomes Australians are crying out for.

If anything, we need policies that encourage more investment into housing supply, not less.

Because unless we fix supply, no amount of tax tinkering will make property ownership more attainable for everyday Australians.

About Aska Soo
Aska is a passionate and driven professional with many years of experience as a property consultant helping clients achieve their financial goals through property acquisition. She has consulted clients around Australia by reviewing, educating, and advising clients about their financial situation and what they need to achieve their end goal of being financially free.