Election 2025: Labor and Coalition housing and tax offsets explained

Labor and the Coalition have launched key policy pledges on housing and on tax offsets.

Prime Minister Anthony Albanese and Labor as well as the Coalition under Opposition Leader Peter Dutton have announced opposing housing and tax policies.

Both sides of politics unveiled opposing housing and tax policies on Sunday.

Here is – briefly – what they are, and what we know about them.

Labor housing

There are two planks to Labor’s announcement at the weekend: the changes to the first-home buyer grant, and a $10bn pledge to build cheap homes for first-home buyers.

First-home buyer guarantee

Labor has proposed to expand the first-home buyer guarantee and remove the income cap on the measure, as well as raising the cap on the price of properties it could apply to.

The measure was introduced by the Morrison government in 2020 and offered first-time home buyers the opportunity to get a mortgage with just a 5 per cent deposit.

The program was capped on the price of the house, the income of the recipient, and offered only limited places a year.

Prime Minister Anthony Albanese at the Labor campaign launch in Perth. Picture: Jason Edwards

For example, it is currently limited to 50,000 places for people who earn under $125,000 and could apply only to property under $900,000 in Sydney or $800,000 in Melbourne.

On Sunday, Labor proposed to remove the 50,000 places limit, blow the income cap off the program such that any first-time home buyer on any income could access the program, and raise the housing price cap across the country – for example, $1.5m in Sydney, $950,000 in Melbourne, and $1m in Brisbane.

Home construction

Anthony Albanese said his government, if re-elected, would spend $10bn to build up to 100,000 new homes reserved for first-home buyers.

This would see the federal government work with states to identify “suitable projects, including government land that is vacant or under-utilised”, and the federal government would apply pressure on states to fast-track the approvals process.

Housing Minister Clare O’Neil said the housing would be cheaper than what is offered by the private sector.

“We have a 40-year problem where our country has not been, No.1, not building enough homes but importantly building homes at affordable prices that new entrants can afford,” she told the ABC’s Insiders program.

“The only answer to this problem is for the government to actually get active on this.”

Coalition housing

An elected Dutton government would allow taxpayers to deduct their mortgage repayments in their tax return.

This would apply to first-time home buyers, on newly constructed homes, and would cover up to $650,000 of a mortgage.

The Coalition estimates this would mean a first-home buyer who earns $120,000 a year with a $650,000 mortgage at 6.1 per cent would receive a benefit of about $12,000 a year.

The Coalition said this would “boost construction activity”.

Opposition Leader Peter Dutton at the Liberal Party campaign launch in Sydney. Picture: Richard Dobson

The Coalition also pledged to lift caps on the first-home buyer guarantee but not to the same extent as Labor: it would remove a maximum cap on the number of guarantees and match the new property price caps, but it would not entirely remove the income limit on borrowers.

Instead, the income cap on individuals would rise from $125,000 to $175,000 and the income cap on joint applicants would increase from $200,000 to $250,000.

Coalition tax

The Coalition has offered taxpayers a ‘Cost of Living Tax Offset’, a one-time bonus on their tax return, promising up to $1200 for people who earn between $48,000 and $144,000.

It is predicted to cost $10bn.

This is reminiscent of the previous Turnbull-era low to middle income tax offset, which offered up to $1080 for taxpayers who earned up to $126,000.

That offset stayed in place for longer than originally intended and was removed in 2023.

Labor tax

On Sunday, Labor offered to streamline tax deduction and earn some a bonus tax offset for work-related expenses by offering a $1000 tax deduction instead of claiming individual items. ‘No paperwork, no box of receipts, no scrolling through your online banking – just tick the box and your return is ready,’ Anthony Albanese said on Sunday.

The Labor Party claimed it would benefit 39 per cent of taxpayers – some 5.7 million people – who claim less than $1000 in deductions.