THE Gillard government has sounded out unions over steps to cool Australia's housing market, with measures that range from a new sales tax for investors sitting on large property portfolios, to curbing the popular strategy of using negative gearing for multiple properties.

Senior federal Labor figures and key union backers are believed to have discussed the plan as a way to tackle housing affordability. Details of the proposals, which would apply to home owners with two or more investment properties, have not yet been developed. The talks come before a tax summit planned for later this year.

Illustration: Tandberg

A spokesman for Treasurer Wayne Swan declined to comment. The Age believes no plans are in place for the coming federal budget.

If implemented, the moves would mark some of the biggest changes to property tax in nearly two decades, particularly in tackling the politically thorny issue of negative gearing, which provides billions of dollars of tax breaks to millions of Australians.