A loophole in the federal government's move to abolish negative gearing will allow millions of Australians who currently own their own home to continue to access the tax breaks after July 2027.

Treasurer Jim Chalmers last week announced the major tax reforms as part of the federal budget, which include winding back the tax concession for property investors from July next year in an effort to help younger Australians trying to enter the housing market.

Until now, any homeowner was able to deduct a net loss from a residential investment property from their overall income, thereby reducing their yearly tax bill.

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From July 2027, that will only apply to new build homes, superannuation funds and those who purchased their properties prior to budget night.

A spokesperson for Chalmers has now confirmed to the Australian Financial Review (AFR) that those property purchases also include owner-occupiers.

This means that Australians who currently own their home bought before budget night could later purchase another property and convert their current home into a negatively geared investment.

KPMG chief economist Brendan Rynne told the AFR the grandfathering arrangements would mean existing owners of both investment properties and owner-occupied homes would be more likely to hold on to their properties so they could retain the option to negatively gear.

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"What that's going to mean is that that housing turnover is probably going to be a bit less than what we've seen in history," Rynne said.

It's thought that defining investment property status in legislation would have been prohibitively complex, so the loophole was likely deemed a necessary part of simplifying the reforms.

The impact of the changes to negative gearing and Capital Gains Tax (CGT) were put to the test for the first time at Saturday auctions on the weekend, with some prospective buyers saying they had already noticed a shift in the market.

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The negative gearing exemptions may seem friendly. One property expert warns it's a' trap'

The friendly tax exemption which still allows newly-built homes to be negatively geared may be a "trap" for inexperienced investors, a property expert has explained.

While negative gearing will be abolished from July next year for established properties bought after the 2026 Federal Budget, investors who purchase brand-new homes can still offset any net losses from their yearly taxable income.

This could inspire new investors to buy into sprawling apartment developments or house-and-land packages on the outskirts of major cities – but these types of properties historically "underperform" as investments.

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Property investment guru and Your Empire chief executive Chris Gray said the federal government's new build exemption may "screw investors" who buy solely based on their freedom to apply negative gearing.

"These massive towers in Docklands in Melbourne or Zetland in Sydney, or the thousands and thousands of blocks of land where all the properties are the same, there is not necessarily lots of natural demand and typically they don't grow in value," Gray told Nine.com.au.

"It's basic economics. If something's in short supply and lots of people want it, the price goes up. Where you've got lots of supply, it won't."

First-time Australian investors who weren't lucky enough to buy before 7.30pm on budget night now have two choices: buy a newly-built home for the negative gearing benefit, or lose the tax break and buy an existing property.

Gray, who has 30 years of experience buying and selling property, said seasoned investors will know to give new builds a wide berth.

He would still choose the option of buying a second-hand home in a high demand area, despite the chance it won't be positively geared for at least a decade.

Some inexperienced buyers, however, could still be fooled by something called "manufactured capital growth".

And it could take years before the reality of their bad investment sinks in.

"Developers might sell 20 at a time and slowly release them. They sell the first lot at say $500,000 and the next one at $525,000 and then $550,000," Gray added.

"Everyone thinks that it's rising, but it's not.

"It's not until you get someone selling it to another person in maybe five years' time that you actually realise, potentially, the property hasn't grown in value at all."

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As Melbourne's hospitality venues are being crippled by a string of alleged arson attacks, police and crime experts are scrambling to figure out the motive behind the fires.

Last week, police arrested two teenage boys after an alleged arson attack on Melbourne's Bar Bambi, marking the venue's third suspicious fire this month.

Forensic Behavioural Science expert Dr Lauren Ducat at Swinburne University of Technology says while there is no clear motive behind the alleged attacks, arson is an "effective weapon" for intimidation.

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"It is fast, destructive and highly visible," she explained.

"It sends a message, creates fear and can shut down businesses quickly.

"When offenders see similar tactics succeed elsewhere, that behaviour can be replicated."

She added that the recent alleged attacks would be seriously impacting the confidence of business owners across the state.

"When motives are unclear, there is a sense of unpredictability about the behaviour and uncertainty about how to protect businesses," Ducat said.

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"That can affect confidence for owners, staff and patrons alike."

Ducat added that arson cases can be hard to prosecute as "evidence is often destroyed" and "offenders can flee" quickly after an attack.

"Motivation can be difficult to discern when there are not clear links to the target of the behaviour," she said.

"We often assume there are direct links between target and motive, and when that is not the case, it takes a more nuanced understanding of why people set fires."

Last week's alleged attack appears to be fuelling a mounting underworld war involving hospitality venues across Melbourne.

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Bar Bambi is not the only venue being caught in the crossfire.

Five Molotov cocktails were thrown towards The George Hotel on Cecil Street in South Melbourne on May 2.

Police have established Operation Eclipse to investigate these incidents and whoever is behind them.

The task force has arrested 51 people since 27 April in relation to 38 incidents.

"Thirty-eight of the 51 arrests have been achieved on the hop, so as people were about to commit offences, they've been arrested," Detective Superintendent Jason Kelly said last week.

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"Victoria Police response is working. We are catching people as they're about to commit these offences.

"We're out there every night, every morning, and we're catching them in the act."

Despite making more than four dozen arrests, detectives admit they haven't been able to get to the bottom of who is behind the attacks.

"We haven't had those clear demands from serious and organised crime that you'd expect and that we saw through the illicit tobacco conflict," Kelly said.

"We are keeping an open mind. Everything is still on the table."

"We are working heavily in relation to some avenues of enquiry and that includes offshore [sydnicates]."

Anybody with information is urged to contact Crime Stoppers online or on 1800 333 000.

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Four US Air Force personnel had a miracle escape after their jets collided at an air show at a base in Idaho.

In a string of social media posts, the Mountain Home Air Force Base confirmed the accident at the Gunfighter Skies air show in front of crowds overnight.

Social media vision showed the pair of fighter planes crashing together mid-air before all four people ejected and triggered their parachutes.

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"The aircrew involved in the incident are in a stable condition," one post read.

A fire triggered by the crash was also safely contained, the base confirmed.

The base had been locked down after the incident, but has since been reopened to allow guests to leave.

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The collision involved two US Navy EA18-G Growlers from the Electronic Attack Squadron 129 in Whidbey Island, Washington, said Commander Amelia Umayam, spokesperson for Naval Air Forces, US Pacific Fleet.

Shane Ogden said he was filming the two jets as they came close together.

A video he captured shows the two aircraft appear to make contact and then spin in tandem as the crew members eject and their parachutes open.

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The planes then fall together, exploding into a fireball upon impact as the crew members drop to the ground nearby.

"I was just filming thinking they were going to split apart and that happened and I filmed the rest," Ogden said in a text message. He said he left soon after the crash because he did not want to get in the way of emergency responders.

This year's Gunfighter Skies event was the first at the base since 2018, when a hang glider died in a crash during an air show performance.

With Associated Press.

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One of Ukraine's largest drone strikes on Russia has killed at least four people, including three near Moscow, and wounded a dozen others, local authorities say.

Debris fell on Russia's largest airport without causing damage before Ukrainian President Volodymyr Zelenskyy confirmed the drone strikes on Sunday, saying they were "entirely justified".

Russia has repeatedly launched similar attacks on Ukraine's capital and other cities during the war, and an expert said that the strikes appeared to be retaliation for recent Russian attacks on Kyiv.

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Russian drone strikes on Ukraine overnight wounded eight people, Ukrainian authorities said.

In Ukraine's strikes on Russia, a woman was killed after a drone hit her home in Khimki, a Russian city just northwest of Moscow, and two men died in the village of Pogorelki, which is 10 kilometres north of the capital, according to local Governor Andrei Vorobyev.

Ukrainian drones had also damaged unspecified "infrastructure" and several high-rise buildings, Vorobyev said on social media.

One man was killed after a drone struck a truck in the Belgorod region, which borders Ukraine, according to local authorities.

In Moscow itself, at least 12 people were wounded in the night-time strike, mostly near the entrance to the city's oil refinery, Mayor Sergei Sobyanin reported. Sobyanin reported that the "technology" of the refinery hadn't been damaged.

Russia's largest airport — Moscow's Sheremetyevo — said that drone debris had fallen on its grounds without causing damage or affecting flights.

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Russian defences shot down 81 drones headed for Moscow overnight, state agency Tass reported, citing Sobyanin, marking one of the largest attacks on the city since Russia launched a full-scale invasion of Ukraine on February 24, 2022.

Russian air defences destroyed 556 drones over Russia overnight, the country's defence ministry said Sunday morning. Shortly after midday local time, it reported that more than 1000 drones had been shot down or jammed in the previous 24 hours.

Zelenskyy said that the drones had flown more than 500 kilometres from Ukrainian territory, and that Ukraine was "overcoming" Russian air defence systems concentrated in and around the capital.

"Our responses to Russia's prolongation of the war and attacks on our cities and communities are entirely justified. This time, Ukrainian long-distance sanctions have reached the Moscow region, and we are clearly telling the Russians: their state must end its war," Zelenskyy said.

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Revenge for Russian attacks, expert says

Nigel Gould Davies, senior fellow for Russia and Eurasia at the International Institute for Strategic Studies, a London-based think tank, said that Ukraine's large-scale attack appeared to be "the retaliation or revenge that President Zelenskyy promised after the fierce attacks that Russia carried out on Kyiv."

Those strikes came immediately after the end of a brief ceasefire that allowed Russia to hold its annual Victory Day parade on May 9 commemorating the Soviet victory over Nazi Germany during World War II.

"It brings home the fact Ukraine has the capacity to strike at very significant scale at or around the Russian capital," taking the war home to Russians in a way that would be "most unwelcome" to the Kremlin, Gould Davies told The Associated Press.

"There is no ongoing peace process to disrupt. What (the attack) is more likely to do is add to the darkening cloud of anxiety over Russia which has developed palpably over the last three or four months," he said.

He cited a combination of factors, including Russia's recent battlefield setbacks, a deteriorating economic situation at home, and the Kremlin's intensifying crackdown on the internet, including in Moscow and Russia's second-largest city, St Petersburg.

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