Bill Shorten is about to take his biggest risk as Opposition Leader, as he prepares to announce a policy aimed at tackling negative gearing.

Mr Shorten is expected to announce the policy at tomorrow's NSW ALP conference, after Shadow Cabinet approved it yesterday, 9NEWS Political Editor Laurie Oakes reported.

"It will put him right in the middle of the tax reform debate," Oakes said.

"If Labor wins the election later this year, negative gearing will only be allowed on new housing properties, not existing ones, after July 1, 2017.

"Also, the generous capital gains tax discounts on investment properties introduced when Peter Costello was Treasurer will be chopped from 50 percent to 25 percent."

More than 1.2 million investors use negative gearing to minimise their tax on rental housing properties.

The policy is expected to upset many people with vested interests, Oakes said.

"But the reasoning is that the Labor leader needs to show he's got guts and is serious about economic policy and the need to repair the Budget," he said.

"Mr Shorten will argue that 93 percent of negative gearing cases involve investment in existing properties, so it does little to boost the building industry or create jobs.

"It also distorts the housing market by allowing investors subsidised by the taxpayer to compete against first-home buyers and families wanting to upgrade their homes."