The Albanese government’s crackdown on negative gearing – billed as a way to address intergenerational inequality – could actually excarberate Australia’s wealth divisions, a property adviser has revealed.
Hot Property Buyers Agency senior buyers agent Zoran Solano said negative gearing tax changes will create a “two-tiered investment” system that benefits Boomers at the expense of younger generations.
Treasurer Jim Chalmer’s recent budget changes, including negative gearing benefits being restricted to new builds, was pitched as a way to create “intergenerational equity” but will inadvertently widen the generational wealth gap by limiting profitability for young property investors, Mr Solano said.
He added that the new rules don’t treat all investors equally because first-timers get “no immediate tax relief”.
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![Australia's Albanese Labor Government Presents Budget](data:image/svg+xml,%3Csvg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 1280 720"%3E%3C/svg%3E)
Australian Treasurer Jim Chalmers announced the negative gearing changes with the May federal budget. Picture: Hilary Wardhaugh
“They treat the people who’ve already spent decades building property investment portfolios far more favourably than the young Australians trying to get started,” Mr Solano said.
“Gen X and Baby Boomers were already the wealthiest cohorts on record, and these changes will push them even further ahead,” he said.
Under the old negative gearing rules, which will be grandfathered for existing investors, owners could offset losses on their property investments against their tax, making the properties cheaper to hold.
Mr Solano explained that it generally takes up to a decade for a property to be “positively geared”. This would be “unfeasible” for most new investors stripped of negative gearing benefits given current high property prices and low rental profits.
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The high holding costs of property without negative gearing will make it difficult for new investors to achieve what Baby Boomers did.
The new rules allow properties bought before July 1 and new builds to keep using this tax benefit but will make property a “financial burden” instead of a “wealth building tool”.
“The people who benefited most from negative gearing for the past 30 years continue to benefit, but the people trying to use it for the first time don’t,” Mr Solano said.
“Gen X and Baby Boomers were already the wealthiest cohorts on record, and these changes will push them even further ahead,” he said.
This change will then have the unintended outcome of pushing young people out of property investment while concentrating profits among older generations.
“This isn’t just a policy tweak,” Mr Solano said.
“It’s a structural shift that will shape who owns Australia’s property wealth for the next 20 to 30 years.
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Younger Aussies, constrained by high home prices, had been turning to rentvesting as a way to get into the housing market. That option has now been taken off the table for many.
“And unless younger Australians find new pathways into the market, the gap between generations will widen faster than anything we’ve seen before.
“These reforms are not helping young people, but they will make them poorer than their parents and grandparents ever were,” he said.
This will then make future generations even more dependent on inheriting the wealth built by their parents.
