Preliminary negotiations signal the Greens want tougher negative gearing and CGT terms, raising uncertainty for property investors and their brokers
Labor's capital gains tax and negative gearing overhaul faces a more complicated legislative road than the government anticipated, with the Greens using their Senate leverage to demand tougher terms before the parliamentary winter recess on 2 July.
Preliminary negotiations between the Labor government under Anthony Albanese (pictured) and the Greens are under way, according to the AFR. The Greens have not guaranteed their Senate support, nor have they agreed to the government's preference of bypassing a Senate inquiry – a key early concession Labor had hoped to secure.
What Labor wants
Labor treasurer Jim Chalmers, in his May Budget, announced that the current 50% CGT discount on assets held for more than 12 months will be replaced from 1 July 2027 with cost-base indexation and a minimum 30% tax on net capital gains.
Negative gearing on established residential properties purchased after 12 May will also be abolished should the legislation pass, with losses only deductible against rental income or future residential property gains.
Read more: Federal Budget 2026: Long-overdue shakeup, or giant rug pull?
Existing arrangements remain unchanged for all properties held before Budget night., while investors purchasing new builds retain access to negative gearing.
What the Greens want to change
The Greens want to go further.
Greens leader Larissa Waters and treasury spokesman Senator Nick McKim – who chaired the Senate inquiry that drove the reform push – are pressing for grandfathering protections on existing assets to be wound back, particularly on negative gearing.
Their starting position is the elimination of the CGT discount entirely, with no exemptions for existing assets. They are also pushing for any CGT discount under the new scheme to be capped at 50%, preventing scenarios where the inflation-linked model produces a higher effective discount.
Senator McKim said Labor has been "handed a historic opportunity to pass genuinely ambitious and progressive tax reform in this parliament," warning that "tinkering around the edges is not going to cut it”.
For mortgage brokers with investor clients, the Senate negotiations introduce two risks: a delay beyond 2 July that prolongs market uncertainty, and the prospect of tougher final terms that erode the grandfathering protections currently shielding pre-Budget purchasers.
Whether the Greens' hardline stance translates into real concessions or a stalled bill remains to be seen – but blocking legislation entirely would risk delivering the very outcome the minor party has spent years campaigning against: no reform at all.
One thing is for sure: Labor's reform package, once expected to pass with Greens support, is shaping up to be anything but straightforward.
