Benn's "Leveragism"
vs. The Great Aussie Property Rort
How decades of tax loopholes turned Australian houses into financial cheat codes, and why the government is finally trying to unplug the controller.
1 What the heck is "Leveragism"?
In his YouTube video "The Richest Country Is Pretty Mid Now", creator Benn Jordan talks about a concept he calls Leveragism.
Think of normal capitalism: you make a good product, sell it, and make money. Leveragism is the dark, mutated version of that. Instead of making something useful, wealthy people and big companies use leverage (borrowed money, tax loopholes, and political power) to hoard assets. They buy up things everyone needs, pump up the prices, and extract wealth from regular people.
It's like playing Monopoly, but the richest player convinced the banker to give them free money to buy all the houses, while you can't even afford to pass Go.
2 John Howard: The OG Aussie Leveragist
Benn was mainly talking about America, but Australia has been running a Masterclass in Leveragism since 1999, courtesy of former Prime Minister John Howard. Howard did two massive things that turned the Aussie housing market from "places to live" into "tax-dodging casinos":
1. Negative Gearing
Normally, if a business loses money, it's bad. But with Australian property, it became a strategy. If your rental property costs you more than the rent you collect, you can subtract that loss from your regular day-job salary. This magically lowers the income tax you have to pay.
2. The 50% CGT Discount
CGT stands for Capital Gains Tax. Howard changed the rules so that if you own an asset for more than a year and sell it for a massive profit, you only have to pay tax on half of that profit.
Combine these two, and you get textbook Leveragism. Wealthy investors borrow huge amounts of money (leverage) to buy existing homes. They happily lose money week-to-week to dodge their income taxes, knowing they can sell the house a few years later for a massive profit and get a 50% discount on the tax bill. They outbid first-home buyers, artificially jacked up prices, and created a housing crisis.
3 Enter Albo: The 2026 Vibe Shift
Fast forward to the May 2026 Federal Budget. Prime Minister Anthony Albanese and Treasurer Jim Chalmers decided it was finally time to nerf the property investor cheat codes. Rolling out from 1 July 2027, the rules are changing massively.
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No more Negative Gearing for existing houses If you buy an old, already-built house after May 12, 2026, you can no longer write off your rental losses against your salary. Those losses are "quarantined" (meaning you can only use them to offset other property income, not your day job).
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Goodbye 50% CGT Discount That magical 50% off coupon for selling property is dead. It's being replaced with a system that just adjusts for inflation, with a strict 30% minimum tax floor on the profits.
🚨 The "New Build" Loophole 🚨
Albo didn't completely kill the property investor dream. If you build a brand-new house, you are exempt from these changes. You can still use the old Negative Gearing rules and claim the 50% CGT discount. Why? The government wants to force the "Leveragists" to actually fund the construction of new homes to fix the housing shortage, rather than just hoarding 60-year-old brick-veneer homes in the suburbs.
4 The Verdict
Does Albanese's 2026 plan end Leveragism in Australia? Not entirely. But it absolutely shifts it. Instead of rewarding people for simply hoarding existing assets (which Benn points out is the core poison of Leveragism), the government is forcing investors to use their leverage to build new stuff.
It's definitely a massive step away from John Howard's "free tax money for boomers" era. Whether it actually makes houses cheap enough for a 20-year-old to buy today? Check back with us in 2030.