Federal Budget 2026: Will These Housing Tax Changes Really Help Young Australians?

As mortgage brokers, we are specifically focusing on the confronting property and housing-related aspects of the 2026 Federal Budget, as we are genuinely concerned about the potential long-term impact these proposed changes may have on younger Australians, middle-aged families, renters and everyday Australians trying to build financial stability through property ownership.

Many Australians are still reeling from the proposed housing tax changes in Australia 2026, including the negative gearing and property tax changes announced as part of the 2026 Federal Budget.

Not only because of the possible impact on investors, renters and the broader Australian housing market — but also because many people feel frustrated seeing major policy positions change after earlier assurances they would not.

As mortgage brokers working directly with everyday Australians every day, we wanted to share our team’s perspective on what we are actually seeing on the ground.

This is simply our broker team’s opinion based on real lending conversations and scenarios.  All trying to navigate one of the toughest housing markets Australia has seen in decades.

Will These Changes Actually Help Young Australians?

The Government says the proposed changes are designed to improve affordability and help younger Australians buy homes.

But from our perspective, many Australians are questioning whether these changes will realistically create the dramatic improvements people are hoping for.     Realistically, most people are not expecting:

  • A $900,000 property to suddenly become a $600,000 property
  • Rental prices to suddenly collapse
  • Housing shortages to disappear overnight

Australia’s housing affordability challenges are driven by much larger structural issues, including:

  • Housing undersupply
  • Strong population growth
  • Rising construction costs
  • Infrastructure delays
  • Council approval bottlenecks
  • Limited housing close to jobs, schools and family networks

These are problems that have built up over many years and cannot easily be solved through investor tax changes alone.

Could these Tax Changes Hurt Young Australians?

Yes – From our broker team’s perspective, one of the biggest concerns with these proposed changes is that they may actually hurt many of the younger Australians the Government claims it is trying to help.

Many younger buyers simply cannot afford to purchase a family home as their first property close to:

  • Their work
  • Their family
  • Their support network
  • Their community

Many younger Australians have relied on negative gearing and long-term property growth as part of stepping-stone property strategies to enter the market, including:

  • Purchasing a modest investment property first
  • Renting it out while living with family or closer to work
  • Buying in more affordable areas first
  • Slowly upgrading over time as incomes and family circumstances improve

For many younger Australians, this is not about becoming wealthy property investors.

It is simply about getting their foot in the door.

Negative gearing benefits and capital gains tax incentives have historically helped support these stepping-stone strategies by assisting borrowing capacity, cashflow and long-term equity growth.

From our perspective, reducing or removing these incentives may effectively tax and penalise younger Australians who are simply trying to use a modest first property purchase as a pathway to building equity. Upgrading, as and when they can.  However they will need to CGT Reductions as well and affordability being assisted with Negative Gearing

Negative Gearing Also Impacts Borrowing Power

Another point being overlooked is that negative gearing does not simply affect tax outcomes.   It can also directly impact borrowing capacity.

Many lenders currently factor negative gearing benefits into servicing calculations when assessing loan applications.

That means the current system can genuinely help some younger Australians:

  • Borrow enough to buy
  • Enter the market sooner
  • Build equity earlier
  • Create long-term financial security

Without those servicing benefits, some buyers may:

  • Borrow less
  • Delay buying altogether
  • Stay renting longer
  • Miss opportunities to enter the market

Many Australians would also argue that if private investors are helping provide rental accommodation during a housing shortage, then allowing reasonable tax deductions for the costs involved makes practical sense.

Most Property Investors are Everyday Australians.

There is often a perception that property investors are large-scale wealthy operators.  But in reality, most Australians who own an investment property only own one.  

According to Australian Taxation Office data, around 70% of property investors own just one investment property.

For many families, that one property is:

  • Part of their retirement planning
  • A financial safety net
  • Something they hope may eventually help their children
  • A way to slowly build long-term stability

At the same time, many landlords are already balancing:

  • Higher interest rates
  • Rising insurance costs
  • Land tax
  • Maintenance expenses
  • Increasing compliance obligations
  • Rental arrears risks

Many smaller investors are already questioning whether property investment remains worth the stress and financial risk.

The direct effect will be further Rental shortages and higher rents.  How is that helping anyone.  Landlords should be incentivised to provide much needed housing not punished?  A fairer way could have been restricting these tax incentives to multiple properties but leave the 1st one alone.

Are we punishing The People Providing Rental Housing?

Another concern from our broker team’s perspective is whether these proposed changes risk discouraging the very people currently providing much-needed rental housing.

At a time when Australia is already facing:

  • Rental shortages
  • Extremely low vacancy rates
  • Rising rents
  • Strong population growth

…many Australians are questioning whether reducing negative gearing incentives during a housing shortage is the right approach.

For many “mum and dad” investors, property investment is already becoming harder due to:

  • Higher interest rates
  • Increased land tax
  • Rising insurance and maintenance costs
  • Growing compliance obligations
  • Rental arrears risks

From our perspective, discouraging smaller investors from remaining in the market may unintentionally reduce rental supply even further.

And this raises another important question.

Many renters are not currently in a financial position to purchase property anyway — regardless of investor tax changes.

Some may still struggle to meet lender servicing criteria due to:

  • Income limitations
  • Existing debts
  • Deposit shortfalls
  • Credit history concerns
  • Casual or unstable employment
  • Rising living costs

So if rental supply reduces, rents continue rising, and investors leave the market — what happens to those renters?

That is one of the biggest concerns many Australians working within the housing and finance industry are now asking.

Trust and Policy Certainty Matters

Another issue many Australians are raising is confidence, stability and trust.   Property decisions are long-term financial decisions based on:

  • Tax settings
  • Lending policies
  • Retirement planning
  • Family goals
  • Long-term financial modelling

That is why policy certainty matters.

Many Australians remember multiple repeated public statements by the current government before the election confirming catagorically these types of major property tax changes were not being considered.

Regardless of political views, when governments later revisit major policies, it can create uncertainty for borrowers, investors and families trying to plan ahead.

In already uncertain economic times, stability and trust matter.

And from our broker team’s perspective, uncertainty around taxation, investment and property policy can make Australians more hesitant to invest, build and commit to long-term housing decisions.

Final Thoughts

From our broker team’s perspective, one of the biggest concerns is younger Australians losing the ability to use stepping-stone strategies to enter the market.

For many younger buyers, purchasing a more affordable property further out — either as an investment initially or as a first home that later becomes an investment — has become one of the few realistic pathways toward eventual family home ownership.

We are concerned these proposed changes may make that pathway harder.

At the same time, many Australians should not feel forced into new construction simply because policy settings favour new builds, particularly given ongoing concerns around:

  • Red tape and delays
  • Builder stability
  • Construction quality
  • Poor workmanship outcomes seen across the industry in recent years

Ultimately, from our perspective, younger Australians need more realistic pathways into property ownership — not fewer.

As we often say:

“Our job is to show you what’s possible.
Your job is to decide what’s right for you.”

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If you would like to review your home loan or explore refinancing options, we’re here to help.

Talk to WhiteStar Finance & Conveyancing to understand your options, improve your finances, and plan your next steps with confidence.

Frequently Asked Questions

Unlike going directly to a bank, we compare multiple lenders and tailor a solution to suit you.

With over 30 years’ experience, we specialise in both straightforward and more complex scenarios — often finding solutions where others can’t.

As mortgage brokers, we’re also bound by Best Interests Duty, meaning we’re legally required to act in your best interests — not the lender’s.

We can review your options (including your credit file) without leaving multiple enquiry marks that may impact your score, so you can explore what’s possible with confidence.

With strong reviews, real client results, and conveyancing support in Victoria, we’re here to guide you from start to finish.

Read our Reviews and Case Studies to know more

Poor credit generally refers to your overall credit history, including missed repayments, defaults or high levels of debt.

Your credit score is a number that reflects this history at a point in time. While your credit score is important, lenders also look at the bigger picture — including your income, expenses and ability to repay.

This means some borrowers may still be eligible for home loan if their credit score is lower. Lenders have different criteria, it about knowing who will help with a bad credit score and also who will help with bad credit like defaults and arrears.

WhiteStar Reviews

This is more common than people think.

Lenders use different valuation methods — including automated (AVM), desktop, and full inspections — and the approach can vary based on the property, location, and lender. As a result, valuations can differ significantly.

We often see multiple lenders come in too low, while another may assess the same property much higher — which can make a refinance possible. As brokers, we can run multiple valuations to find the right fit.

It’s one of the reasons nearly 77% of home loans are now written through brokers — knowing where to look can make all the difference.

A family pledge (guarantor loan) allows a family member — usually a parent — to use equity in their property to support your home loan.

Not all lenders offer this, and not all accept every family member as a guarantor. The guarantor must be suitable, understand the arrangement, and have sufficient equity to provide the guarantee. They will also need to be involved in the application, speak with the broker, and sign the required documentation.

In most cases, it’s a limited guarantee, typically around 20% of the purchase price plus costs, secured as a second mortgage against the guarantor’s property. This can allow you to borrow up to 100% plus costs with no deposit required.

Importantly, you must still be able to service the full loan on your own — the guarantor provides security, not income support.

Nearly 77% of home loans in Australia are arranged through mortgage brokers — because they offer a wider, more tailored range of options.

A broker compares multiple lenders (not just one bank), helping you find the right fit — especially if you have a poor credit score or need bad credit options.

We also follow Best Interests Duty (BID), meaning we must act in your best interests, and we can assess your options without leaving multiple credit enquiries on your file, which can impact your score.

Read some of Our Reviews Here

 

To be eligible, you generally need to be an Australian citizen or permanent resident, buying a home to live in, and able to service the loan.

The First Home Guarantee is for first home buyers, while the Family Home Guarantee is for single parents with at least one dependent child.

These schemes allow you to buy with a low deposit (from 2%–5%) and avoid Lenders Mortgage Insurance (LMI) — which is often a major barrier for first home buyers and single parents, especially when saving while renting can be difficult.

Income limits, property price caps apply, and not all lenders offer the schemes.

Housing Australia – Learn More Here

Yes — many first home buyers are now choosing to purchase an investment property first as a stepping-stone into the market.

Buyers can still use:

  • A traditional deposit
  • A genuine savings pathway
  • A family pledge/guarantor option
  • Gifted funds from family (subject to lender policy)

Generally, government first home buyer incentives such as stamp duty concessions or LMI waiver schemes may not apply if purchasing purely as an investment property.

However, for some buyers, securing a family pledge or stronger deposit position may still provide a realistic way to get their foot in the door sooner.

Another strategy some buyers consider is purchasing as an owner-occupier initially, living in the property for the required period (often around 12 months depending on the scheme and lender), and potentially converting the property into an investment later down the track as circumstances change.

Rental income can help with repayments, and there may be tax benefits, but it’s important to ensure the strategy suits your situation and risk comfort.

Lenders assess investment income and expenses differently, which can impact borrowing capacity — so working with a broker helps ensure the loan is structured correctly for you.

You’ll still need to service the loan based on your income and commitments.

Yes — many people use equity in their home as a deposit, meaning you may not need cash savings.

Rental income can help with repayments, and there may be tax benefits, but it’s important to ensure the strategy suits your situation and risk comfort.

Lenders assess investment income and expenses differently, which can impact borrowing capacity — so working with a broker helps ensure the loan is structured correctly for you.

You’ll still need to service the loan based on your income and commitments.

Many Australians use an SMSF to gain more control and transparency over their super, including the ability to invest directly in property as part of a long-term strategy.

However, SMSF property lending is highly regulated. You generally need:

  • sufficient super balance (often $200k–$300k+ as a guide)
  • the ability to service the loan rent and contributions  (your income and contributions still matter)
  • the correct SMSF and bare trust structure set up before purchase

Not everyone will qualify, and lending options are more limited than standard home loans.

It’s important to speak with a broker early to confirm eligibility before spending money on advice or setup, as getting the structure or timing wrong can be costly.

Read our Blog

How to Buy in your SMSF Blog

SMSF loans are structured differently to standard home loans. The property is typically held in a separate (bare) trust, and lending options are more limited.

Buying a property inside an SMSF can be a smart strategy — but only when the structure, lending, compliance and long-term planning are done correctly.

If you’d like help checking borrowing capacity the team at WhiteStar Finance & Conveyancing can guide you on the process and finance criteria & eligibility, however we cannot offer legal and financial advice as to whether a SMSF or Purchasing in your SMSF is suitable for your individual circumstances.

Read More Here

Yes in many cases you can get a home loan with Bad Credit.  Options are very much dependent on the situation and financials.

You Might Have More Options Than You Think

Many people come to WhiteStar thinking they need a bad credit home loan and that their options are limited.

In many cases, once we understand the full background, we’re able to help secure a standard home loan — simply by matching the right lender and approach to the situation.

Just because your credit score is low doesn’t always mean you’re out of options.

See some of Our Case Studies