SPECIAL UPDATE The most significant property tax reforms in decades
Treasurer Jim Chalmers handed down the Budget on 12 May 2026, flagging sweeping changes to negative gearing and capital gains tax. The good news for existing investors is that grandfathering provisions are generous.
Negative gearing will be restricted to new builds only from 1 July 2027. If you owned an investment property before 7:30pm on Tuesday night, your entitlements are fully preserved for as long as you hold it.
Capital gains tax changes from 1 July 2027, replacing the 50% discount with inflation-adjusted indexation and introducing a minimum 30% tax on gains. Only gains arising after that date are affected. Investors in new builds can choose between the old and new arrangements when they sell.
Foreign buyer ban on purchasing existing homes is extended to 30 June 2029.
Housing supply receives a record $47 billion commitment, including $2 billion for enabling infrastructure and a $10 billion program to build up to 100,000 homes exclusively for first home buyers.
First home buyers retain the 5% deposit scheme, with the Help to Buy shared equity scheme expected to see expanded caps making it more viable in Sydney and Melbourne.
Our take: Existing investors are protected. For those considering a future purchase, new tax policy clearly favours new builds over established properties. The period between now and 30 June 2027 is worth considering carefully.
For prospective investors please note changes to negative gearing will reduce your borrowing capacity once banks have processed it through their systems. Younger and more marginal investors will be affected most. While it may be tempting to wait for conditions to settle, future borrowing options will be more limited than they are now. Delaying could mean missing the opportunity to act altogether.
We remind all readers that property investment is and remains a long-term wealth creation strategy. Whilst budget changes will alter tax considerations, that does not change the goals and objectives of this strategy. At this time, we expect some to nervously sit on the side-lines waiting to see what will happen next, whilst others will look for opportunity.
Contact us to discuss what these changes could mean for your situation.