The federal budget has limited negative gearing - where a landlord can deduct losses on a rental property against their wages at tax time - to newly built homes from July 2027, with an exemption for properties bought before the announcement.
The 50 per cent discount on capital gains tax will also be overhauled, with the measure on existing properties to be linked to the current rate of inflation from July 2027, and a minimum tax rate of 30 per cent to be imposed.
Prime Minister Anthony Albanese said the measures would help 75,000 young Australians be able to buy their first home over the coming decade, in a bid to level the playing field between generations.
But he said a winding back of the tax breaks would not curb ambition for future generations.
"They can invest in a new build, though, and what they'll be doing is not just helping to build their own portfolio, they'll be helping to build homes that other young people will be able to move into and rent," he told Seven's Sunrise program on Wednesday.
"They'll be able to do that in exactly the same way."
The coalition has attacked Labor for misleading voters, after the prime minister pledged during the 2025 election to not tinker with negative gearing.
The prime minister conceded there would be a large-scale campaign against the move.
"We're doing something about it, that's the point. You're elected to govern, to make hard decisions," he said.
"I knew there'd be a bit of blowback on this. I understand that, you know, I'll put why we're doing it, but gee, it's the right thing to do."
The government has promised a $250 tax offset for all Australians earning a wage as a sweetener for the tax changes, but that won't hit pockets until July 2028.
Treasurer Jim Chalmers said more immediate relief would be coming through from July in the form of tax cuts, already telegraphed in the previous year's budget, as well as a $1000 instant tax deduction
"The new tax cut in last night's budget is time to coincide with some of the revenue that we will raise in some of these other ways," he told ABC TV.
"There's a very substantial improvement in the budget over the 10-year period. And if that makes more room for tax cuts, that's a good thing."
The treasurer said it would take time for the full extent of the negative gearing changes to become clear.
"Typically, it depends on which modelling you rely on, but between five to 10 years, typically, a property will tip over from negatively geared to positively geared," Dr Chalmers said.
"That will phase out of the system, but people can continue to invest in new properties, because we desperately need to build more homes."
Gains on properties built before 1985 - which have previously been exempt from CGT - will also begin being taxed from July 2027 at the inflation-adjusted rate.
A 30 per cent minimum tax will also be imposed in discretionary trusts, which are often used by wealthy families to split income between family members and minimise tax.
Together, the changes to investment taxes will rake in an extra $8 billion, to be spent on the new offset for all workers and further relief for businesses and startups.
Opposition Leader Angus Taylor said while the coalition supported measures on small business, the tax changes were a broken promise.
"We think there's different savings. We think there's much better places to save rather than hitting Australians with higher taxes," he told ABC Radio.
"The budget papers show that the changes around negative gearing, capital gains and the trusts will dampen investment."
