Last Federal Budget announcement has sparked a lot of discussion, particularly around proposed changes to negative gearing, Capital Gains Tax (CGT), and investment property taxation more broadly. If you own investment property, or you’re planning to, there’s understandably a lot of uncertainty right now about what this means for your existing portfolio and your strategy going forward.
So let’s cut through the noise.
It’s worth flagging upfront that many of these measures still need to pass through legislation before becoming law. What follows is a calm, practical overview of the key announcements and what we believe they may mean for borrowers, homeowners, and investors.
If you want to talk through what this means for your portfolio specifically, book a strategy call with our team — we’re already helping clients plan for what’s coming.
Key Takeaways
- Existing investors are protected. Investment properties purchased before the announcement are proposed to be grandfathered. Current owners are not expected to lose existing negative gearing arrangements.
- Established properties purchased after 12 May 2026 will not be eligible to claim negative gearing for the FY26 financial year, and from 1 July 2027 will no longer allow negative gearing benefits against personal income.
- New builds are expected to remain exempt from the proposed changes.
- Trust and company structures are largely unchanged. Expect these to become far more important for investors moving forward.
- CGT shifts from July 2027. The current 50% discount may move toward an inflation indexation method alongside a minimum 30% CGT framework. Speak to your accountant if you’re considering selling in the next 12 to 24 months.
- Rents are likely to rise as supply shortages and reduced investor participation in established housing place upward pressure on the rental market.
- The winning strategy going forward: higher yielding properties, strong cashflow assets, value add opportunities, dual income properties, smarter ownership structures, and new builds.
- Don’t panic. Restructure. Negative gearing was never the reason to invest in property. Structure and strategy matter more than ever.
What Actually Changed
Two big shifts came out of the Budget announcement:
1. Negative gearing on established investment properties is being phased out. From 1 July 2027, established investment properties will no longer allow negative gearing benefits against personal income. Established properties purchased after 12 May 2026 will also not be eligible to claim negative gearing for the FY26 financial year.
That said, property losses can still be used to offset future property gains, so across all holding structures this still works for legal tax minimisation. Negative cashflow properties typically become positive cashflow after a few years of rent rises anyway, so the long term picture is not as scary as the headlines suggest.
2. Capital Gains Tax is shifting from July 2027. The current 50% CGT discount may move toward an inflation indexation method alongside a minimum 30% CGT framework. For long term investors focused on passive income and wealth creation, this may not materially change strategy. But anyone considering selling assets in the next 12 to 24 months should seek advice from their accountant or financial adviser first.
If You Already Own Investment Properties, Relax
This is the bit most people are missing.
Investment properties purchased before the announcement are proposed to be grandfathered. That means current owners are not expected to lose existing negative gearing arrangements. Your existing portfolio is expected to keep the same tax treatment it had yesterday.
So if you’ve already done the work, you’re protected.
If You’re Holding Through Trusts or Companies, Even Less Changes
For investors buying for long term passive income through trust or company structures, there’s very little here that materially affects you. Trusts and companies never had negative gearing benefits in the first place, so nothing has been taken away.
Many of our clients with larger portfolios were already purchasing through these structures for asset protection, estate planning, and tax flexibility reasons. The Budget just made that strategy even more attractive for everyone else, and we expect these structures to become very important for our clients moving forward.
What This Actually Means Going Forward
Chris’s view is that while the headlines sound dramatic, the long term fundamentals of property investing haven’t changed. The focus simply becomes more strategic.
Going forward, we believe investors are likely to place greater emphasis on:
- Higher yielding properties
- Strong cashflow opportunities
- Quality assets in undersupplied areas
- Renovation and value add strategies
- Granny flats and dual income properties
- Smarter ownership and portfolio structures
- New build opportunities
We also expect supply shortages and reduced investor participation in established housing could place additional upward pressure on rents over time. When investors can’t offset losses against their salary, they need the property to wash its own face. The only way to do that is to push rents up. Renters will feel this.
New builds remain exempt from the proposed changes, which is a clear signal from the government that they want supply, not investors competing for existing stock. The catch is that build costs are going up, demand for new builds will likely outstrip supply, and prices will rise as a result.
Commercial property and SMSF lending are also about to become a lot more popular. Both sit outside the negative gearing changes and offer genuine tax effectiveness for the right investor.
What Else Was in the Budget
Outside of property, the Budget also included a few broader measures worth knowing about:
- Future personal income tax reductions
- A proposed instant $1,000 tax deduction for individuals from 2026/27
- Increased superannuation contribution caps
- Permanent $20,000 instant asset write-offs for eligible small businesses
- Additional business tax and restructuring measures
For business owners, self employed clients, and high income earners in particular, these changes are worth reviewing alongside your accountant when you’re planning your next move.
The Big Picture: Don’t Panic, Just Get Your Structure Right
The government’s goal seems clear. Disincentivise investing in established stock, encourage home ownership for owner occupiers, and push investor capital into new builds. But I’m not convinced that’s how it plays out in reality.
Why? Because seasoned investors don’t stop investing. They just shift strategy.
The fundamentals of property haven’t changed. Australia still has population growth, undersupplied housing markets, and a tax system that, while tightening, still rewards long term holders. What’s changed is which structures and which property types deliver the best result going forward.
My prediction: professional investors will start using SMSF lending, trust structures, and company structures far more heavily. I currently hold properties across all three of these structures myself, and these changes mean I’ll be using them even more, both for my own portfolio and for our clients (subject to proper tax advice).
The other thing worth remembering: negative gearing should never have been your reason to invest in the first place. The long term goal is always for a property to be positively geared. Negative gearing is just a phase you pass through on the way there. If your investment strategy collapses because negative gearing is gone, the strategy was never really there to begin with.
For Existing Investors Wanting to Keep Building
Don’t panic. Change strategy. The new norm looks like:
Higher yielding properties. Dual income properties. Value add opportunities. Commercial property. Newly built properties. Properties bought inside trust, company, or SMSF structures where appropriate.
If your portfolio is in your personal name and was built before the announcement, your existing negative gearing arrangements are expected to be grandfathered. Future purchases just need a smarter structure.
For New Investors
The opportunities haven’t disappeared. They’ve just narrowed.
Property selection is now more important than ever. So is structure. Buying the wrong property in the wrong structure will hurt you a lot more than it would have a year ago. But buying the right property in the right structure, with the right finance behind it, still produces the same long term result it always has.
This is exactly the kind of work we do. Structuring loans to support trust purchases, SMSF lending, multi-property portfolios, and complex income scenarios. The clients who’ll do well over the next decade are the ones who get the structure right from the start.
The Bottom Line
Australian property investing is entering a new phase where structure, strategy, and asset selection matter more than ever. The old approach of simply buying a negatively geared property and “waiting” may become less effective. Strong cashflow, quality assets, and strategic portfolio construction become increasingly important.
For first home buyers, homeowners, and investors alike, avoiding emotional decisions during periods of uncertainty is critical. Every situation is different, and any major financial or tax decisions should be reviewed with your accountant and professional advisers.If you’d like to discuss your lending position, borrowing capacity, investment strategy, or upcoming plans, get in touch with our team. We’ll walk you through the options and build a plan that works under the new rules.