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2026–27 Federal Budget: What it means for property investors
A plain English summary of the CGT and negative gearing changes announced on 12 May 2026, fact-checked against official sources.
Last updated: 17 May 2026
The headline changes
12 May 2026 — Budget night
Negative gearing restrictions commence
Properties purchased after 7:30 PM AEST on 12 May 2026 are subject to the new negative gearing rules. Rental losses can no longer be deducted against wages or salary income.
1 July 2027
50% CGT discount abolished
The 50% CGT discount for individuals, trusts, and partnerships is replaced by CPI indexation and a 30% minimum tax rate on net capital gains.
1 July 2027
New build choice available
Investors in eligible new residential properties can choose between the 50% CGT discount or the new CPI indexation regime on disposal.
CGT discount — detailed changes
What is changing
From 1 July 2027, the 50% CGT discount — which has applied since 21 September 1999 — will be abolished for individuals, trusts, and partnerships. It will be replaced by:
- Cost base indexation: Your cost base is adjusted for inflation using the ABS CPI before calculating your taxable gain
- 30% minimum tax rate: A minimum 30% tax rate applies to net capital gains (after indexation), regardless of your marginal rate
What is NOT changing
- The main residence CGT exemption is unchanged
- The CGT discount for superannuation funds (33.33%) is expected to remain unchanged
- Pre-1985 assets remain outside the CGT regime (until 1 July 2027)
- Income support recipients (including Age Pension recipients) are exempt from the 30% minimum tax
- Companies are not affected (they do not receive the CGT discount)
Transitional arrangements
The Government has announced transitional arrangements to protect existing investments:
- The new rules apply only to gains arising on or after 1 July 2027
- For assets held before 1 July 2027 but sold after, the 50% discount applies to gains accrued up to 1 July 2027, and CPI indexation applies to gains accruing after that date
- The asset's market value at 1 July 2027 forms its new cost base for post-2027 gains
Negative gearing — detailed changes
What is changing
From 7:30 PM AEST on 12 May 2026, net rental losses from established residential properties acquired after that date can only be deducted against:
- Rental income from other residential properties
- Capital gains from residential properties
Losses cannot be deducted against wages, salary, business income, or other non-property income. Unused losses may be carried forward to future years.
What is NOT changing
- Properties purchased before 7:30 PM AEST on 12 May 2026 are grandfathered — the current rules apply
- Eligible new builds are exempt from the restriction
- Widely held trusts and superannuation funds are excluded
- Build-to-rent developments are excluded
- Private investors supporting government housing programs are excluded
- Commercial property and other non-residential assets are not affected
Impact on different investor types
| Investor type | CGT impact | Neg. gearing impact |
|---|---|---|
| Purchased before Budget night | Grandfathered — 50% discount applies to pre-2027 gains | Fully deductible — unchanged |
| Purchased after Budget night (established property) | New rules from 1 Jul 2027 — CPI indexation + 30% floor | Quarantined — cannot offset wages |
| New build investor (any date) | Can choose 50% discount or new rules on disposal | Exempt from restriction |
| Superannuation fund | 33.33% discount expected to remain | Not affected |
| Company | No CGT discount (unchanged) | Not affected |