Budget 2026–27: What the Negative Gearing & CGT Changes Mean for Property Investors

The 2026–27 Federal Budget delivered some of the most significant changes to property investment tax rules in decades. If you own an investment property — or are thinking about buying one — you need to understand what’s changed, what’s protected, and what to do next.

Here’s a plain-English breakdown of the key changes and what they mean for you.

What Is Negative Gearing and What’s Changing?

Negative gearing has been a cornerstone of Australian property investment strategy for decades.

Negative gearing occurs when the costs of owning an investment property — mortgage interest, rates, maintenance — exceed the rental income it generates. Under current rules, that net rental loss can be deducted against all other income, including your salary. This reduces your overall tax bill.

From 1 July 2027, that will change for established residential properties purchased after Budget night (12 May 2026). Losses from these properties will only be deductible against other residential property income or capital gains — not your salary or wages. Excess losses can be carried forward to future years.

What’s Protected (Grandfathering) If you already owned an investment property before 7:30 pm AEST on 12 May 2026, nothing changes for you. You can continue to negatively gear as normal under existing rules — for as long as you hold the property.

Capital Gains Tax (CGT) — A Major Overhaul

The 50% CGT discount — in place since 1999 — will be replaced from 1 July 2027.

Currently, if you sell an asset you’ve held for more than 12 months, you receive a 50% CGT discount — meaning you only pay tax on half the capital gain. This has been in place since the Howard government introduced it in 1999.

From 1 July 2027, the 50% discount will be replaced with:

Importantly, the CGT changes apply to gains arising after 1 July 2027. Gains accrued up to that date remain taxed under current rules.

New Builds Are Exempt — A Clear Government Signal

The Government has deliberately carved out new residential construction from both changes. If you purchase a newly built property:

Important: CGT Changes Go Beyond Property

The CGT overhaul affects shares and all investment assets — not just property.

This is a point many investors are missing. The CGT reforms extend well beyond real estate. From 1 July 2027, the replacement of the 50% CGT discount with cost base indexation and a 30% minimum tax will apply to all CGT assets held by individuals, trusts and partnerships — including shares, managed funds, and other investments.

If you hold a diversified investment portfolio, these changes are relevant to your broader financial planning, not just your property strategy. We strongly recommend speaking with your accountant or financial adviser before making any decisions — particularly around whether to realise any gains before 1 July 2027.

Key Dates Summary

These Changes Are Not Yet Law The budget measures still need to pass through Parliament before becoming legislation. However, given the Government’s majority, passage is expected. It’s important to plan ahead — don’t wait until the legislation is passed to seek advice.

What Should You Do Now?

If you already own investment properties purchased before Budget night — you’re protected. No action required on the negative gearing front.

If you’re considering buying an investment property, the key question is whether to buy before 1 July 2027 (to lock in full negative gearing for that purchase) or to focus on new builds, which remain fully exempt.

Either way, the financing strategy matters just as much as the tax strategy. Getting the right loan structure — interest only vs. principal and interest, offset accounts, loan splitting — can significantly impact your cash flow under the new rules.

Not Sure Where You Stand?

Abdullah Rubel | Mortgage Broker | 17+ Years Experience
Enlighten Finance | ACL 434567

I can help you review your current position, model the impact of these changes on your investment loans, and make sure your finance structure is working for you — not against you.

Book a Free Review Call 0433 199 363