18/05/2026
There has been significant discussion since the Australian Federal Budget was handed down on 12 May 2026, particularly in relation to negative gearing, capital gains tax and housing.
While media coverage has focused heavily on these measures, the proposals are still subject to the parliamentary process and may change before any laws are passed.
Importantly, these are proposed changes only and are not yet law.
The Budget measures now enter the legislative process and will generally need to pass both houses of Parliament before becoming law.
Some parts of the housing and tax package have already attracted opposition, so the final form of any measures may differ from what has been announced.
Here’s the key context for property investors:
• The Budget is undergoing parliamentary debate and will likely face amendments and negotiation before any measures are passed.
• The Coalition has already indicated it will oppose the controversial changes to negative gearing and the capital gains tax (CGT) discount.
• The Stage 3 income tax cuts, that were legislated earlier, are proceeding as planned, including the reduction of the lowest marginal tax rate from 16% to 15% from 1 July 2026.
• A new proposed $250 annual tax offset for workers is scheduled from the 2027-28 financial year, however this also requires legislation to be passed.
On the property side, the proposed changes that are causing the most concern are:
• From 1 July 2027, negative gearing on established residential properties would be restricted.
• The existing 50% CGT discount for individuals would be replaced with a 'real gain' basis (adjusting for inflation), again from 1 July 2027.
It’s crucial to understand the timing and how the dates work.
Budget night is used as the dividing line for those properties that fall under the ‘old’ rules and those that fall under the ‘new’ rules.
That’s designed to prevent a rush of last minute buying simply to lock in grandfathered tax treatment.
However, the actual tax changes don’t start until next July (2027). In practice, that means:
Transitional arrangements, if introduced, may create timing considerations for property investors. However, the practical impact will depend on the final legislation, transaction costs and each investor’s circumstances.
All of this is still subject to debate, negotiation and potential change.
The Budget as a whole faces a contentious path through Parliament, and it is entirely possible that some measures will be delayed, diluted or blocked outright.
For now, the message is straightforward:
• These are proposals, not final law.
• There is a formal approval process still to run, with clear political resistance already in play.
• Knee jerk decisions based on early commentary or social media ‘out takes’ are far riskier than the Budget itself.
We will be delivering a full overview of the Budget and how it may impact property investors in our June industry update, once the dust has settled and we know what measures are real and what were just headlines.
As we always do in Australia, we’ll ride the waves of change and structure things once we know what’s available under the rules that finally pass.
For now, keep calm.
If you’re worried or unsure how this might affect funding for your next purchase, reach out and we’ll walk through your situation properly, one step at a time.
Natalie Wilcox
Finance Manager
Send a message to learn more
