The Australian Government has introduced significant changes to negative gearing and capital gains tax (CGT), with the reforms taking effect from 1 July 2027. The measures are designed to improve housing affordability and encourage investment in new housing supply
Negative Gearing Changes
Under the current rules, investors can use rental property losses to reduce their taxable income, including salary and wages.
From 1 July 2027, negative gearing benefits for residential property investments will be largely limited to new builds. For eligible established properties acquired after the announced cut-off date, rental losses will generally only be able to offset income and gains from other residential properties, with unused losses carried forward to future years.
Capital Gains Tax Changes
The current 50% CGT discount for assets held longer than 12 months will be replaced by:
- Cost-base indexation to account for inflation.
- A 30% minimum tax rate on capital gains.
The new rules will apply to gains accrued from 1 July 2027 onwards.
Existing Investors Protected
Properties owned or under contract before 7:30pm AEST on 12 May 2026 are generally grandfathered under the existing negative gearing rules, limiting the impact on current investors.
What Does This Mean?
The reforms are expected to:
- Encourage investment in new housing developments.
- Reduce tax incentives for purchasing established properties.
- Improve opportunities for first-home buyers.
- Reshape long-term property investment strategies.
With these changes approaching, investors should review their property portfolios and seek professional advice to understand how the new rules may affect their future tax position.
[budget.gov.au] Click here for a more detailed summary from the Budget 2026–27 Tax Explainer