The Albanese government in Australia is exploring significant changes to negative gearing and capital gains tax in light of the ongoing housing crisis. Treasurer Jim Chalmers highlighted in a recent statement that his department is assessing potential reforms, which may restrict negative gearing to just two investment properties. This initiative aims to generate additional revenue and tackle the housing affordability challenges faced by many Australians.

Negative gearing, which currently allows property investors to deduct losses on their investments from their taxable income, has often been criticized for favoring wealthier individuals and exacerbating the housing market issues. By limiting the practice to two properties, the government hopes to alleviate some of the wealth concentration in the housing market while also addressing the broader implications of such investment strategies on housing availability. Additionally, there are discussions around reducing the 50% capital gains discount, further indicating a shift in the government's approach to property investment taxation.

Chalmers noted that these considerations were part of a standard Treasury process as they prepare for the upcoming federal budget. With reforms potentially on the horizon, the government's stance signifies a proactive response to long-standing calls for changes in housing policy, prompting discussions about the fairness and accessibility of the Australian housing market for future generations.