Previously confidential treasury advice to the government shows the coalition engaged in a "cheap and dishonest scare campaign" over the opposition's proposed negative gearing changes, Labor says.
The 2016 documents, obtained by the ABC under freedom of information laws, suggest Labor's policies to tighten tax breaks for property investors would have a small impact on house prices.
The papers contradict the Turnbull government's claim that changing negative gearing and reducing the capital gains tax discount would act like a "sledgehammer" on the Australian economy.
Opposition treasury spokesman Chris Bowen says the advice exposes the government's attack on Labor's policies "as little more than outright lies".
"We knew that scare campaign was shrill, we knew that scare campaign was unfounded, we now know beyond a doubt it was also fundamentally dishonest," Mr Bowen told reporters in Sydney on Monday.
The policy was a hot-button issue during the 2016 election campaign.
"The likes of Malcolm Turnbull, Scott Morrison and Peter Dutton still chose to dial up the political rhetoric in a poor attempt at a scare campaign," Mr Bowen said.
The documents state Labor's policies could introduce some downward pressure on property prices in the short term - particularly if the commencement of the plan coincided with a weaker housing market.
"Overall, price changes are likely to be small, though the composition of ownership may shift away from domestic investors," Treasury officials wrote.
Mr Bowen accused Treasurer Scott Morrison of "politicising the Treasury".
"Scott Morrison has a personal case to answer here as to why he not only ignored this Treasury advice but suppressed it," Mr Bowen said.
Asked if the Turnbull government had lied about the impact of Labor's policy, Liberal frontbencher Simon Birmingham said: "Absolutely not."
"It's two-year-old analysis; it shows indeed, there would be downward pressure, which is exactly what the government has been saying all along," Senator Birmingham told ABC radio.
Financial Services Minister Kelly O'Dwyer doubled down on the government's line on Monday.
"Treasury's advice confirms what we've been saying all along, that to have a permanent tax hike - which is what Labor's proposing - to increase capital gains tax by 50 per cent and to remove negative gearing, would have a disastrous impact when combined with weakness in the housing market," she told ABC radio.
Ms O'Dwyer insisted there was "nothing inconsistent" in the documents and with what the treasurer had claimed.