Tuesday night's Federal Budget delivered the biggest shake-up to property investment tax in a generation. You have probably seen the headlines. Allow me to cut through the noise and tell you what has actually changed, what has not and what smart buyers and investors should do next.
From 1st July 2027, three things shift:
The 50% capital gains tax discount is replaced by CPI-based indexation. You will only pay tax on your real gain, not the portion eaten by inflation. For long-term holders in a moderate-growth environment, the outcome is surprisingly similar to the old rules. For high-growth assets, the tax bill increases.
Negative gearing on established residential property is ring-fenced. If you buy an established investment property after 7:30pm last Tuesday, your rental losses can no longer be offset against your salary from 1 July 2027. Losses carry forward and can be used against future rental income, but the annual tax refund most investors rely on is gone for new purchases.
A 30% minimum tax applies to discretionary trust income from 1 July 2028. If you run investments through a family trust, this needs a conversation with your accountant.
What did not change?
None of this is law yet. It must pass the Senate, which Labor does not control. Expect debate, possible amendments and more detail over the coming months. Do not make rushed decisions based on announcements alone.
For home buyers, this is genuinely good news. Slightly less investor competition for established property, a government committed to housing supply, and your biggest asset still growing completely tax-free. If you have been on the fence about buying your first home or upgrading, the case just got stronger.
For existing investors, your current portfolio is protected. If you bought before last Tuesday night, your negative gearing arrangements are grandfathered for as long as you hold the property. The change affects your exit calculation, which we can walk you through.
A critically important part to note is that if you plan to build a portfolio in the future (after 1 July 2027), then property investing is not dead! Let’s say you have 2 positively geared properties - these can be used to offset any negative geared investment properties in the portfolio – you just can’t use personal earned income to offset losses.
For new investors, the landscape has shifted but it has not closed. Two clear pathways remain: established property that genuinely stacks up on yield without relying on tax losses, and new builds where the full suite of tax advantages is retained. Both can work. Both require more discipline and better advice than before.
For renters, Treasury is forecasting minimal rent increases. We are more cautious. Construction costs remain elevated, new supply takes years to flow through, and a reduced investor pool in established residential will tighten availability before new stock fills the gap.
Let's start a conversation.
Here is the part the headlines will not tell you.
Australia still has a structural housing shortage. Population growth still outpaces dwelling completions. Rental vacancies remain near historic lows across most capital cities. The fundamentals that have driven property wealth for the past 40 years have not changed overnight because a Treasurer stood up in Canberra to deliver a budget last night.
What has changed is that the easy ride is over for marginal investment decisions propped up by tax concessions. Properties that genuinely perform, in the right location, bought at the right price, with strong underlying demand, will continue to perform. They always have.
The investors who will feel this most are those who were relying on tax losses to make a borderline deal work. If the numbers only stack up with a government subsidy, they were never great numbers to begin with.
And for new builds? The government has just handed this category a significant structural advantage. Done right, with genuine location analysis, quality builders and independent advice, new builds now offer strong depreciation benefits, retained negative gearing, and flexible CGT treatment at sale. But you need to be super selective to avoid over-populated areas, generic apartments or far-flung locations with low growth prospects. Watch out for spruikers in this space.
The keyword is independent. Not every new build is a good investment. Project marketers are about to spend enormous sums pulling investors toward stock that suits the developer's margins, not yours. The location, the builder's track record, the quality of construction, and the real secondary market value all matter enormously. This is exactly where an independent buyers' agency earns its keep.
We have been doing this for 25 years. More than 5,500 purchases. Over 50 industry awards. Through GST, the GFC, APRA crackdowns, COVID, and multiple rate cycles. We have seen every version of this conversation before and we are still here helping clients make smart decisions.
Our commitment has not changed. We work exclusively for buyers. We take no commissions from developers, agents, or anyone else. Where we negotiate benefits on new builds, they go to you as price reductions or property upgrades, not to us.
Right now we are helping clients across five areas:
If you would like to talk through what this means for your situation specifically, please reach out. A short conversation is often all it takes to get clarity.
Let's start a conversation.
Call us on 1300 655 615 or reply to this email and we will be in touch.
Stay calm. Think long. Buy well.
Rich Harvey CEO & Founder,
Propertybuyer