Australia’s federal budget introduced major changes to negative gearing, limiting the tax concession to newly built residential properties from 1 July 2027. The overhaul is causing significant controversy across several parties, most notably housing advocates, property investors, and political parties, regarding fairness, rental prices, and housing supply.
As a result of the announcement and looming legislation, from 1 July 2027, negative gearing on residential investment properties will be restricted to newly constructed dwellings.
Existing residential properties will be subject to loss quarantining rules, meaning any rental losses can only be offset against future rental income or capital gains from residential property investments.
As previously reported by HR Leader’s sister brand, Accountants Daily, there is immense uncertainty around negative gearing and capital gains among Australians, and more residential investors are looking to commercial property on the hunt for yield.
Many workers and professionals are struggling to relocate due to a lack of available rental stock across the country.
So, how does the negative gearing reform impact employee mobility?
Fundamentally, the negative gearing reforms in Australia are ultimately affecting employee mobility by changing housing affordability and rental availability.
Supporters argue the reforms could improve long-term mobility by reducing house price pressure and helping workers buy or rent closer to jobs, especially in major cities.
However, some critics warn that reduced investor incentives may tighten rental supply in the short term, increasing rents and making relocation harder for renters, graduates, and temporary workers.
Marc Bosotti from Vialto Partner highlighted that many professionals rely on rental income when deciding whether to retain their home property while working overseas.
“The proposed changes could increase the cost of holding Australian property during an assignment, particularly for those who fall outside transitional relief,” he said.
“Organisations may face new challenges in incentivising international moves, with higher personal carrying costs potentially discouraging employees from accepting global roles.”
“This could have flow-on effects for talent mobility, workforce planning, and Australia’s competitiveness in attracting and retaining internationally active professionals.”
The concerns being raised regarding the gearing reforms ultimately stem from their impact on employee mobility.
With critics warning that the decreased incentive for investors may tighten rental supply, relocation naturally becomes more difficult for graduates, temporary workers, and professionals moving for employment.
Employees who retain Australian property during overseas events may face higher carrying costs, which may discourage global roles and complicate workforce operations.
RELATED TERMS
The term “workforce” or “labour force” refers to the group of people who are either employed or unemployed.
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