Treasurer Jim Chalmers handed down the 2026-27 Budget at 7:30pm AEST on Tuesday 12 May 2026. The two biggest changes for property — negative gearing limited to new builds and the 50% CGT discount replaced with CPI indexation + 30% minimum tax — are the most significant reform to investor property tax since 1985. Both kick in 1 July 2027, with grandfathering at Budget night (7:30pm AEST, 12 May 2026).
This is the largest single reform to investor property tax since the early-1990s reintroduction of the 50% CGT discount. From 1 July 2027, losses on established residential investment property can no longer be deducted against wages or salary income. The losses are still allowed — they just carry forward to offset future rental income or capital gains on the same property.
| Group | Acquisition date | What applies |
|---|---|---|
| 1. Existing investors | Owned before 7:30pm 12 May 2026 | Grandfathered. Full negative gearing continues. |
| 2. Transitional | After 12 May 2026, before 1 July 2027 | Transitional rules apply — seek advice. |
| 3. Future established | From 1 July 2027 (established) | Losses ring-fenced; can't offset wages/salary. |
| 4. New builds | Any date | Full negative gearing retained. |
The policy framing references "newly constructed" residential property. Final definitional detail will appear in Budget Paper No. 2 and subsequent draft legislation. For now, treat it as a property purchased from a developer where the dwelling has not previously been occupied or sold as residential, similar to existing FHOG / stamp duty new-build definitions.
Even where losses are ring-fenced from your salary, they're not lost. They carry forward indefinitely and can be deducted against:
For most investors this changes the timing of the tax benefit, not the long-run amount — but the time-value-of-money impact can be substantial.
The Government estimates the negative gearing change combined with CGT reform will support around 75,000 additional homeowners over a decade by shifting investor demand toward new construction rather than competing for existing stock with first-home buyers.
Read more: DecisionLab: Negative gearing explained.
From 1 July 2027, individuals, partnerships and trusts (not companies) will no longer get the flat 50% CGT discount on gains held more than 12 months. Instead, two changes combine:
Your cost base is indexed forward by CPI to the date of sale. The taxable gain is sale proceeds minus indexed cost base. Then a minimum 30% rate is applied on that real gain (your actual marginal rate applies if higher).
Gains accrued before 1 July 2027 retain the 50% discount. Post-1 July 2027 gains use indexation + 30% minimum. The precise allocation method for a property held across the date will be set out in the Bill.
The Government's shared-equity scheme — where the Commonwealth takes a co-equity stake in your property in exchange for a lower deposit and lower monthly cost — is being expanded significantly.
| Parameter | Previous | New (announced) |
|---|---|---|
| Income cap — single | $90,000 | $100,000 |
| Income cap — couple | $120,000 | $160,000 |
| Property cap — Sydney | ~$950,000 | $1.3M |
| Property cap — Brisbane | Lower | $1M |
| Property cap — Canberra | Lower | $1M |
| Government equity (new build) | 40% | 40% (no change) |
| Government equity (existing) | 30% | 30% (no change) |
| Total scheme funding | $5.5bn | $6.3bn (+$800M) |
| Target buyers | 40,000 | 40,000 over 4 years |
The expansion means the scheme now covers "more than 5 million properties" by the Government's framing, up from a more constrained set under the original caps.
The FHBG remains as expanded on 1 October 2025:
The Regional First Home Buyer Guarantee was effectively subsumed into the expanded FHBG on the same date.
Related: First home buyer pages by state, First home buyer step-by-step guide.
The existing ban on foreign investors purchasing established (not newly constructed) residential dwellings is extended to mid-2029. Originally introduced as a 2-year measure, this is the second extension. Foreign investors can still buy new dwellings, vacant land for development, and certain build-to-rent investments.
The Government is committing $2 billion over 4 years from 2026-27 to fund the boring-but-essential infrastructure — sewerage, water, power — that unlocks new housing supply. Targets around 65,000 new homes over a decade. This is a supply-side play that complements the demand-side changes in negative gearing and CGT.
Construction begins 2026-27. Homes sold exclusively to first home buyers below market value through grants or zero-interest loans co-invested with state governments. This is funded from previously-announced election commitments.
The Government calls this the largest housing package in Commonwealth history. Components:
| Date | What kicks in |
|---|---|
| 7:30pm 12 May 2026 | Grandfathering line for negative gearing & CGT. Properties owned at this moment are protected. |
| 1 Jul 2026 | $2bn Local Infrastructure Fund commences. Super contribution caps lift (relevant for FHSSS savers). Construction of first-home-only homes begins. |
| 1 Jul 2027 | Negative gearing limited to new builds. 50% CGT discount replaced with CPI indexation + 30% min tax. |
| Mid 2029 | Foreign-investor ban on established dwellings expires (unless extended again). |
If you're an existing property investor with negatively geared properties: nothing to do. Your arrangements are grandfathered.
If you're considering buying an investment property: the negative gearing rules don't change until 1 July 2027, so a purchase between now and then is currently in the transitional window. Consider the longer-term tax implications carefully, particularly if you're financing on the assumption of large salary-offset deductions.
If you're a first home buyer: the Help to Buy expansion is the big news. The income and property caps lift — check your eligibility once Housing Australia publishes the updated rules. The First Home Guarantee remains unlimited at 5% deposit with LMI waived.
If you've been considering a new build vs an established property: the new-build path now has materially better long-term tax treatment for investment use.
How investor home loans work, deductibility, and the rate margin over owner-occupier loans.
Read guide →Complete first home buyer guide — from deposit to settlement.
Read guide →Calculate stamp duty for your state, including first home buyer concessions.
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