It would be "unfair" not to consider mum and dad investors as the government mulls a major overhaul of negative gearing and the capital gains tax (CGT), according to financial experts.

"It seems unfair for those who made decisions based on current circumstances to have the rug pulled out from under them," Gareth Croy, a financial advisor from Surfers Paradise, told The Senior.

Federal Treasurer Jim Chalmers has signaled the government is weighing possible grandfathering arrangements for current property investors and those using negative gearing.

"No one really knows what the treasurer is going to come out with. Everyone's pretty keen to understand what it is and how it's going to work," said Mr Croy, who specialises in property investing at Your Future Strategy.

"There's a lot of speculation."

The government is widely expected to announce reforms to tax concessions for property investors at its May 12 budget, winding back the CGT discount, and crimping how many properties investors can negatively gear, as the pair say "intergenerational inequity" will be a focus of the May 12 budget.

But the treasurer has hinted the government may consider grandfathering the current settings for investors, allowing them to continue being taxed under the old settings.

"We've made it really clear for some time now that we think that there are intergenerational issues in the tax system and in the housing market," Chalmers told CommBank View: Economics and Markets podcast.

"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.

"What you try and do is to make sure that we recognise the decisions that people have taken in the past."

The price of rentals across the country rose 5.7 per cent in the year to March 2026, and 41.2 per cent over the last five years - the equivalent of an additional $202 a week for the average rental, according to data from Cotality.

House prices rose 9.9 per cent nationally in the last 12 months, but Sydney and Melbourne's prices dipped slightly in March, amid rising interest rates, surging fuel prices and uncertainty overseas.

The Treasurer insisted the government was mostly focused on building new homes as part of its strategy to tackle housing unaffordability.

‍

It could signal a rise in rental prices

Mr Croy believes changes to negative gearing in particular could result in a "bump in rental prices".

"With the CGT discount, you've got some control over the timing of the sale of assets," he said.

"I think there's a real risk with removing negative gearing."

Negative gearing allows properties to be used as depreciating assets against income, which can help lower an overall tax bill.

The CGT discount allows people selling property to reduce the amount of tax they pay. The current discount reduces the tax on gains by 50 per cent.

Mr Croy said negative gearing is widely used by investors, and any changes could quickly lead to a reduction in the number of rentals.

"You just won't see as many investors because it doesn't have that benefit anymore. It's not as attractive," he said.

"The risk is that we will see a reduction in the supply of rental properties, and that means we will see a bump in rental prices".

The proposed changes could also lead to a longer-term reduction in investments in new housing, he said.

With investors playing a key role in supporting new builds, he thinks this will ultimately impact how many homes are built.

"It'll be a shift in the structure of ownership over the longer term, where there won't be as much desire from investors, which is going to amplify the housing shortage."

This view is shared by Opposition Leader Angus Taylor, who called the idea a "thought bubble" that would make it more expensive and difficult to build homes.

"What we need from this government is lower taxes, more houses being built, less inflation, and lower interest rates."

----

This article was published in The Senior on Friday 01/05/2026