The 2026 Budget,
explained for property buyers

Negative gearing limited to new builds

For established residential properties purchased after 7:30 pm AEST on 12 May 2026, rental losses can no longer be offset against salary or other non-rental income from 1 July 2027. Losses can still be carried forward and applied against future rental income or capital gains. New builds are exempt and retain full negative gearing.

50% CGT discount replaced with indexation + 30% minimum tax

From 1 July 2027, the 50% capital gains tax discount is replaced for individuals, trusts and partnerships by cost-base indexation on assets held more than 12 months, with a 30% minimum tax rate. Capital growth accrued before 1 July 2027 still uses the existing 50% discount under transitional rules. The main residence CGT exemption, the superannuation one-third CGT discount, and (per the announcement) new builds are not subject to the new regime.

Grandfathering for existing owners

Properties held — including those under contract but not yet settled — as at 7:30 pm AEST on 12 May 2026 are grandfathered. Existing investors retain negative gearing on those properties until they sell. SMSFs, widely held trusts, build-to-rent and affordable housing programs are also exempt from the negative gearing changes.

First home buyer / owner-occupier

Largely unaffected directly; positioned to benefit indirectly.

The main residence CGT exemption is unchanged. Reduced investor demand for established properties is expected to ease competition in the segments where first home buyers most commonly compete. CommBank's housing outlook revises forecast dwelling price growth to 3% to December 2026 (down from 5%).

Investor buying a new build

Tax position retained — and arguably enhanced relative to established stock.

Per the announcement, eligible new builds retain full negative gearing, and investors in new builds are able to choose between the 50% CGT discount and the new indexation method — whichever produces a better outcome. A 'new build' includes knock-down-rebuilds that increase the number of dwellings; substantial renovations that do not add supply are not eligible. Specific eligibility will be confirmed in the legislation.

Investor buying an established property

Material change to after-tax cash flow on purchases from 12 May 2026 onwards.

From 1 July 2027, rental losses on these properties can only be offset against rental income or capital gains — not against salary. CommBank estimates this is equivalent to a 90–155 basis-point increase in investor mortgage rates in immediate cash-flow terms. Properties contracted between 12 May 2026 and 30 June 2027 can be negatively geared until 30 June 2027 only.

Existing investor (held before 7:30 pm, 12 May 2026)

Grandfathered — no change to negative gearing while held.

Existing arrangements continue until the property is sold. CGT on disposal uses a split system: capital growth up to 1 July 2027 uses the existing 50% discount; growth from 1 July 2027 onwards uses cost-base indexation with the 30% minimum tax. The reform creates a 'lock-in' effect — existing investors have a stronger incentive to hold rather than sell.

SMSF / superannuation fund investor

Excluded from the negative gearing changes; one-third CGT discount retained.

Properties held in SMSFs and widely held trusts are explicitly outside scope of the negative gearing changes. Superannuation funds keep the one-third CGT discount for assets held more than 12 months. The 30% minimum tax does not apply to superannuation.