Treasurer Jim Chalmers is eyeing reforms to Australia's capital gains tax discount - the policy that has helped Baby Boomers accumulate property wealth for decades.

With an election looming, Labor is weighing a politically explosive tax change that could reshape Australia's property market and the intergenerational wealth divide that defines Australian politics.

The current system offers a 50% discount on capital gains tax for assets held longer than 12 months. Introduced by the Howard government in 1999, it's been a cornerstone of Australia's property investment boom - and a major driver of house price inflation that's locked younger Australians out of homeownership.

According to reports, Chalmers is considering reducing or eliminating the discount. For property investors who've built wealth on negatively geared portfolios, that's a direct hit to their returns.

Mate, this is classic pre-election kite-flying. Float a controversial idea, gauge the reaction, then either commit or back away claiming you were "just having a conversation."

The politics are brutal. Touch the CGT discount and you'll face a property investor backlash that could cost Labor seats in outer suburban marginal electorates where investment properties are common. But do nothing and you're telling young Australians that housing affordability isn't a priority.

The discount has always been defended as encouraging investment. Critics argue it encourages speculation, inflates asset prices, and delivers the biggest tax breaks to the wealthiest Australians who can afford multiple investment properties.

Previous attempts at CGT reform have died quick deaths. Bill Shorten proposed reducing the discount to 25% in 2019 - and lost the "unloseable" election partly because of it.

Whether Chalmers is serious or just testing the waters remains unclear. What's certain is that touching one of Australia's most sacred tax breaks would be the biggest political gamble Labor could make before an election.