Budget 2026-27: Property Tax Changes
What the Federal Budget Property Tax Changes Mean for Investors, Landlords and Tenants
Quick take
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The 2026-27 Federal Budget has proposed major changes to negative gearing and capital gains tax (CGT), to encourage more housing supply, support owner-occupiers and reshaping how investors assess residential property.
From 1 July 2027, negative gearing for residential property is proposed to be limited to new builds. Existing investment properties held before 7:30pm AEST on 12 May 2026 are expected to be exempt from the negative gearing changes. Capital gains tax changes are also proposed, replacing the current 50% CGT discount with cost base indexation and a 30% minimum tax rate on capital gains for applicable future gains.
What this means for investors
For existing investors, the key message is simple: do not panic, but do review your strategy.
If you already owned an investment property before the announcement time, the current negative gearing rules are expected to continue applying to that property for as long as you hold it. However, future capital gains after 1 July 2027 may be treated under the new CGT arrangements.
For future investors, the focus will likely shift towards new-build properties, stronger cashflow modelling, rental yield, loan costs, holding costs and long-term growth assumptions. The investment decision will need to stand up on its own numbers, not just on tax treatment.
What this means for landlords
For landlords, this is a timely reminder to review whether your investment is performing properly.
Rental return, vacancy, maintenance costs, insurance, compliance, loan costs and tenant retention will all become even more important. A well-managed property with strong tenant selection and minimal downtime will matter more than ever.
Our view is that landlords should be asking two questions: Is my property achieving the right return? And is my investment being managed in a way that protects its long-term performance?
What this means for tenants
For tenants, the Government expects the rental impact to be small, estimating an increase of less than $2 per week for a household paying the current median rent.
That said, rental markets are local. The real issue remains supply. If investor activity slows in established properties, the rental supply conversation will remain important, particularly in areas already experiencing strong demand.
What this means for clients
For clients thinking about buying, selling or holding an investment property, the next 12-18 months will be important.
There is no one-size-fits-all answer. The right move will depend on the property, loan position, tax structure, rental return, future capital growth, cash flow, and personal objectives.
Our advice is to get informed early, review the numbers and seek proper tax and financial advice before making any major decision.
Our view
- Property investment is not over. It just needs to be smarter, sharper and better planned.
- Strong rental returns, quality tenant selection, reduced vacancy, proactive maintenance, compliance and expert property management will matter more than ever.
- If you own an investment property or are considering purchasing one, now is the time to review your property strategy with your accountant, financial adviser and property manager. This is general information only and is not tax, legal or financial advice. Clients should seek independent advice based on their own circumstances before making any decision.
Sources:
Australian Government Budget 2026-27, Tax Explainer: Negative Gearing and Capital Gains Tax Reform.
