The Australian Labor Party proposes a fix to the so‑called widow tax by ensuring that individuals who inherit a spouse’s share of a jointly owned investment property retain the negative gearing treatment that applied before the partner’s death.

Draft legislation released for public consultation would let negative gearing follow the inheritance, addressing concerns that widows, widowers, divorcees, and domestic violence victims could be disadvantaged under the previous grandfathering rules.

The proposed reform would allow inheritors of shares in investment properties to maintain the pre‑death negative gearing benefits, correcting a flaw in earlier reforms.

Senator David Pocock and allies framed the issue as a political test for the government by pushing to close the loophole.

Feedback on the draft closes mid‑August, with ongoing consultations and the possibility of additional legislative tranches to finalise reforms.

Opposition voices, led by Acting Opposition Leader, criticized Labor for still addressing flaws they say they introduced and urged closer scrutiny of the new proposals.

Separately, a private senator’s bill would require affordable housing on Commonwealth land sold or leased for private development, proposing a default 30% affordable housing requirement with regulatory flexibility.

In addition to the inheritance fix, the government is consulting on exemptions and changes related to newly built homes, affordable housing, disability housing, and the capital gains tax system.

Pocock framed the changes as promoting fairer treatment for those inheriting real estate through marriage dissolution or death, with public consultation open until mid‑August.

The reforms will apply capital gains tax to residents based on the period they hold an asset, with ongoing consultation addressing foreign, mixed, and temporary residents and tax consolidated groups.

Labor intends to refine or rewrite parts of the package based on submissions, with outcomes guiding the next phase of the tax overhaul to be announced later.

Labor argues the reforms aim to make housing more affordable for first‑home buyers, preserve investors’ gains, and incentivize new housing supply while leveling the field between labor and asset income.