Treasurer Jim Chalmers has hinted that new landlords will be hit by the Albanese government's changes to negative gearing and capital gains taxes.
Chalmers is expected to wind back the 50 per cent CGT discount and overhaul negative gearing in the May 12 federal budget.
Appearing on the CommBank View: Economics and Markets podcast, he hinted the changes would be transitional and that ‘grandfathering’ may be considered.
Grandfathering protects existing landlords from changes to laws, meaning that any upcoming tweaks would only impact new property investors.
'Without getting into hypotheticals about policies, what you try to do is to make sure that we recognise the decisions that people have taken in the past,' Chalmers said.
'But again, people shouldn't read too much into that.
'Whenever anyone is thinking about these sorts of issues, some of these big tax reforms that have been speculated about, obviously, people work through or think through some of those transitional matters.'
Chalmers said there were 'intergenerational issues in the tax system and in the housing market'.
Jim Chalmers (pictured) hinted that tax changes in the May budget may be grandfathered
'We are working through ways to try and address that,' he said.
He was pressed on whether Labor is seriously considering scrapping the CGT discount and returning to an indexation-based model, as well as eliminating negative gearing entirely.
Both measures have long been criticised for favouring investors over owner-occupiers, especially first home buyers and young Australians priced out of the market.
Chalmers conceded that the divide between asset and wage taxes can no longer be ignored.
'There is a welcome debate out there about the role of tax reform in trying to rebalance this issue we've got between very generous treatment of assets and less generous treatment of labour income of workers,' he said.
But he was quick to dampen expectations of an instant cash windfall for the budget.
Chalmers was also at pains to assure homeowners that the reforms are not designed to crash the market.
'We're not targeting a certain outcome on price,' he said. 'We care about there being affordable options for people.'
The capital gains tax discount and negative gearing are in the government's crosshairs (stock image)
He stressed that the real problem is housing supply, made worse by a long-term shift in the market.
'The biggest challenge in the housing market is we don't have enough homes,' he said.
'But we're also focused on the composition of the home ownership base.'
Pointing to falling home ownership rates and a growing share of investment properties, Chalmers said tax changes around the turn of the century helped reshape the landscape.
'I think that that's had an impact in the composition of the housing market,' he said.
'When we talk about intergenerational issues, the intersection between tax and housing is not something that anyone should ignore.'