Senate committee backs housing tax rules despite calls for further safeguards

A federal tax package that will help determine which newly built homes retain favourable investor treatment has moved closer to a Senate vote, with a parliamentary committee recommending that the legislation pass without amendment.

The Senate Economics Legislation Committee’s recommendation was disclosed on Friday in the Property Council of Australia’s response to its report. The industry group argued that unresolved details could discourage investment in apartment developments, build-to-rent projects and other new housing.

The committee’s recommendation does not itself change the law. The Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 and its companion rates bill must still pass the Senate and receive royal assent.

What the bill would settle

The latest bill sits alongside tax changes already legislated following the May federal budget. From 1 July 2027, negative gearing will generally be limited to new residential properties, while established investment homes bought after the budget-night cut-off will face restrictions on using rental losses to reduce tax on wages and other non-property income.

The new legislation provides important detail about what will qualify as a new residential dwelling.

Treasury’s design generally treats a home as new when it genuinely adds to housing supply and is acquired within 24 months of the first occupancy certificate being issued. The government had initially proposed a 12-month window before extending it to give builders and developers more time to sell completed stock.

The bill also addresses exemptions for housing serving particular purposes, including eligible build-to-rent developments, affordable and social housing, public housing and specialist disability accommodation.

This matters because a home can be recently completed without necessarily satisfying the tax definition. The date of the occupancy certificate, the way the dwelling was created and the timing of the purchase may all affect whether an investor can access the new-build treatment.

Replacing one demolished house with one new house, for example, may not count as increasing supply, whereas creating additional separately usable dwellings could meet the policy objective, depending on the final rules and circumstances.

Property industry seeks changes

The Property Council wants the new-home eligibility period extended from 24 months to 36 months. It argues that slower apartment sales could otherwise cause completed but unsold dwellings to lose their new-build status before an investor purchases them.

The group also wants stronger protection for build-to-rent investment and changes affecting capital losses and discretionary trusts. It warned that uncertainty or additional tax costs could make some housing projects harder to finance.

Separately, the bills propose a minimum 30 per cent tax on relevant income from discretionary trusts from 1 July 2028. They would provide transitional options for affected trusts, including restructuring relief and a mechanism under which certain trusts could fix beneficiary entitlements.

The Tax Institute told the Senate inquiry that significant technical and practical issues remained unresolved. It recommended delaying the trust provisions until the rules and legislative instruments on which they depend were available for scrutiny.

The government’s position is that its wider reforms will direct investment towards new supply and reduce the advantage property investors have held over aspiring owner-occupiers purchasing established homes.

What happens next

The committee recommendation strengthens the government’s path through Parliament, but the final outcome will depend on the Senate vote and any amendments negotiated before passage.

Buyers should not assume that a property marketed as new will automatically receive new-build tax treatment. Contracts for recently completed apartments and house-and-land packages may need to be checked against the final legislation, including the occupancy-certificate date.

Investors considering purchases that depend on negative gearing or capital gains treatment should obtain registered tax advice rather than relying on sales material. Developers holding completed stock will also be watching whether the 24-month window survives the parliamentary process.

What it means for you

• Buyers of new investment homes should confirm the first occupancy-certificate date before exchanging contracts.
• The committee’s decision is a recommendation; the bills have not yet completed the Senate process.
• Build-to-rent and designated affordable or social housing may receive exemptions, subject to the final law.
• Tax outcomes depend on individual circumstances, so obtain advice from a registered tax professional.