The Federal Budget announced on 12 May 2026 changes some property investment tax rules — but for existing investors, the protections are robust. Here's a clear summary of what applies to you, what doesn't, and what (if anything) is worth discussing with your adviser.
Important: This is a general information guide only — not financial, tax, or legal advice. Budget measures must still pass Parliament. Always speak to your accountant or financial adviser before making decisions.
Don't want to read the whole thing? Start here — one card, one change, one sentence.
From July 2027, if you buy an existing (established) property, you can no longer use rental losses to reduce your wage tax. New builds are unaffected.
From 1 Jul 2027The 50% profit discount is replaced with an inflation adjustment plus a minimum 30% tax rate. Only applies to growth after 1 July 2027.
From 1 Jul 2027Good news — a $250 tax offset and a $1,000 expense deduction mean you take home more pay, strengthening your borrowing capacity.
From 2026–27 / 2027–28Property wealth is built on capital growth and rental yield — not tax treatment. Negative gearing is a cashflow bonus, not the investment thesis. Here's exactly how the rules apply to your established investment property.
Your existing portfolio — nothing changes
Every property held before 12 May 2026 is fully grandfathered. Your negative gearing, your CGT position, your strategy — all intact, indefinitely.
Negative gearing is a bonus tool, not the strategy
Property builds wealth through capital growth and rental income. Tax benefits support the journey — and even under new rules, losses are carried forward and recovered at sale.
Keep your strategy sharp · Stay ahead of the market
Note: Newly constructed residential properties operate under a separate set of rules not covered in this guide. Speak to your accountant if you are specifically exploring that option.
The biggest headline — but existing investors are protected.
If your investment property costs you more than it earns in rent — for example, the mortgage repayments are higher than the rent — that loss used to reduce the tax you pay on your wages. That's negative gearing.
If you buy an established property after Budget Night, rental losses are ring-fenced to residential property income only. They can no longer reduce your wages or salary. But they accumulate in a loss pool attached to your property — and that pool has real value at the back end.
As rents rise over time, your property flips from loss to profit. Your accumulated losses are applied against that rental profit first — you pay zero tax on rental income until the entire pool is exhausted.
Any remaining losses in the pool directly reduce your capital gain before CGT is calculated. If you've accumulated $60,000 in losses and your gain is $300,000 — you're only assessed on $240,000.
Important: Carry-forward losses can only be applied against residential property income and capital gains. They cannot be used against wages, salary, dividends, interest or any other income type.
WHAT'S YOUR SITUATION?
Nothing changes. You keep full negative gearing for as long as you hold the property.
Your exchange date counts, not settlement. You're grandfathered under the old rules.
You can use negative gearing this financial year only. From 1 July 2027, losses ring-fence to property income.
Losses can only offset other property income — not wages. Losses carry forward — they're not lost.
New builds keep full negative gearing permanently. Losses can still reduce your wage tax.
Even if you can't use losses against wages, they carry forward to reduce tax on future rental income or when you sell. Think of it as a deferred tax benefit, not a deleted one.
Superannuation funds — including self-managed super funds — are excluded from all negative gearing changes. If you invest through an SMSF, nothing changes.
When you sell a property, the profit is taxed differently from July 2027. Here's the simple version.
When you sold a property you'd held for more than a year, you only paid tax on half of your profit. That was the "50% CGT discount."
Instead of halving your profit, the government adjusts your purchase price for inflation (CPI) — so you only pay tax on the real gain above inflation. A minimum tax of 30% also applies to any real gain.
All growth that happened before 1 July 2027 is still calculated under the old 50% discount rule. Only new growth after that date uses the new rules. You are not being taxed retrospectively.
The home you live in is not affected by any CGT rule changes, new or old.
Super funds retain their existing CGT rules. The changes do not apply to properties held inside an SMSF.
If you invest in a new build, you can pick whichever CGT method gives you the better outcome when you sell. The old 50% discount remains available.
If you're investing through a self-managed super fund, most of this Budget simply doesn't apply to you.
WHY SMSF ACTUALLY GETS BETTER FROM HERE
Super funds pay only 15% on rental income (0% in pension phase). Personal investors now face a 30% minimum on gains. SMSF property has become relatively more attractive, not less.
While the 50% personal CGT discount is being replaced, the super fund discount is untouched. Selling inside an SMSF remains more tax-effective than personal name for high-growth assets.
While the structure is shielded, always confirm your specific trustee arrangements and SMSF deed with your accountant and SMSF auditor before acting.
Only relevant if you hold investments through a family discretionary trust. You have time to act — but the clock has started.
A structure that lets the trustee split income between family members — lowering the tax rate by spreading profits to people on lower incomes. Previously a significant tax advantage.
A minimum 30% tax rate applies to the trust's income — so the income splitting advantage narrows significantly. The trustee pays it at source; beneficiaries receive tax credits for it.
From 1 July 2027, the government offers rollover relief — meaning you can move from a trust into a company or fixed trust with no capital gains tax on the transition. This window runs for 3 years. Act thoughtfully, but don't wait too long.
Fixed trusts, widely held trusts, SMSFs, deceased estates, charitable trusts, and primary production income are not affected by the minimum trust tax.
This directly improves your take-home income — and your ability to service a mortgage.
Every Australian worker earns a $250 annual tax refund automatically — applied at tax return time. No forms needed. Starts 1 July 2027.
Workers can deduct up to $1,000 for work expenses without receipts. Saves an average of $205. Starts 2026–27 income year.
| Annual Income | Annual Tax Saving vs 2023–24 |
|---|---|
| $50,000 | Up to $2,050 |
| $74,100 (median) | Up to $2,638 |
| $81,245 (average) | Up to $2,816 |
| $106,657 | Up to $3,451 |
| $150,000 | Up to $4,905 |
| $190,000+ | Up to $5,705 |
Includes 3 rounds of tax cuts + WATO + instant deduction from 2027–28. Source: Budget 2026–27.
Policy changes reshape the rules. They don't change the foundations. Here's why long-term property investment remains compelling.
Australia has a well-documented shortage of housing. Population keeps growing, construction is slow. That gap between supply and demand underpins rental yields and long-term property values.
Properties bought before 12 May 2026 keep full negative gearing — forever. CGT rules only apply to growth after 1 July 2027. If you already own property, your position is secure.
Under the new rules, rental losses on established properties carry forward. They don't disappear — they reduce your tax bill when you earn rental income or eventually sell.
Over 13 million Australians get tax cuts — up to $2,816 more per year. That money flows into the rental market and supports demand. Strong renters mean stronger yields for investors.
The new CGT system actually rewards long-term holders. If inflation erodes your real gain, your taxable gain shrinks too. For patient investors holding through cycles, indexation can be a better outcome.
Treasury modelling projects ~75,000 additional owner-occupiers over the next decade. More people buying their own homes means more stable market values and less speculative volatility.
Australia's net overseas migration has reached some of the highest levels in the nation's history. Every new arrival needs a home — placing sustained, structural upward pressure on rental demand and occupancy rates, particularly across Sydney and Melbourne. More renters means stronger yields and lower vacancy risk for investors.
Building materials and labour costs have increased sharply since 2020 and show no sign of reversing meaningfully. New housing takes longer and costs significantly more to deliver — placing a structural floor on replacement cost values. This makes existing, established properties increasingly difficult to replace at current prices, supporting long-term capital values.
The changes roll out in stages. Here's when each one matters.
All properties held at 7:30pm AEST today are grandfathered. Review your portfolio and trust structure with your adviser now.
The Australian Small Business and Family Enterprise Ombudsman begins helping small businesses understand restructuring options, including incorporation via ASIC.
New negative gearing rules take effect. CPI indexation and 30% minimum CGT begin for new gains. Rollover relief window opens for trust holders (3 years).
The $250 Working Australians Tax Offset takes effect. The $1,000 instant work deduction is already available from the 2026–27 income year.
If you hold investments through a family discretionary trust, the 30% minimum tax applies from this date. You have until 30 June 2030 to use the CGT-free rollover relief window to restructure if needed.
You don't need to rush — but being prepared early means better decisions later.
Check the acquisition date of every property you own. Anything held or under contract before 7:30pm AEST on 12 May 2026 is fully protected from the negative gearing changes — document this now.
If you hold property through a discretionary trust, model the impact of the 30% minimum tax on your distributions. In many cases the impact is modest — but you need to know your number before deciding whether to restructure.
For any property you plan to sell after July 2027, your accountant will need to establish its value at that date (as the new CGT cost base). The ATO will provide online tools — start thinking about this now for high-value assets.
Carry-forward loss provisions mean rental losses are never lost. Established properties still offer strong long-term fundamentals. The case to buy thoughtfully hasn't gone away — speak to your adviser about how timing interacts with your income position.
Both reforms explicitly exclude superannuation funds. Confirm your specific structure is standard with your SMSF auditor, then recognise that your SMSF property investment strategy is intact.
Straight answers. No jargon.
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