Prime Minister Anthony Albanese insists a desire not to see Australia divided into those who own homes and those who don't as a reason for making sweeping reforms to negative gearing and capital gains tax in last night's budget.

In April 2025, Albanese resoundingly denied he would make changes to both ahead of the election, saying: "Yes! How hard is it? For the 50th time", when asked if he would rule out the changes.

Albanese defended his broken election promise, saying the government had to take action to tackle the issue of housing supply.

IN PICTURES: The federal budget newspaper front pages

"We've changed our position, I'm upfront about that," he said on Today, denying he had lied to the Australian population.

"We've changed our position because we're throwing absolutely everything at supply."

Under the changes, negative gearing, which allows home owners to deduct a net loss from a residential investment property from their overall income and lower their total taxable income, will be scrapped, while a 50 per cent discount on the capital gains tax payable will be rolled back.

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Albanese said the decision was "difficult", but was necessary to help young people get closer to the dream of owning a home.

"There's nothing more aspiring than the legitimate aspiration Australians have to own their own home," he said. "We can't sit back and watch a whole generation be locked out."

He clarified the changes wouldn't be coming into effect until next year, and that existing investments would be "grandfathered", meaning any property purchased until now would be protected from the changes.

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Responding to claims the changes would instead impact older Australians who already own homes, Albanese said he did not want Australia to be divided along lines of home ownership.

"I don't want to see a divided Australia which is divided into Australians who own homes – some multiple homes- and people who simply will never be able to achieve the dream and make it a reality of having a roof over your head," he said.

"What's changed as well is increasingly not just young Australians, but parents and grandparents… who say 'I'm worried about my kids and grandkids won't be able to own a home.'"

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