Budget 2026: Property Investors Face 30% CGT Floor from July 2027

The 2026-27 budget scraps the 50% CGT discount and restricts negative gearing to new builds from 1 July 2027. Here's what investors need to do.

The 2026-27 federal budget, handed down on the night of 12 May 2026, marks one of the most significant overhauls to property investment tax settings in a generation. If you own an investment property — or are planning to buy one — two headline reforms will reshape how you structure your finances, and both take effect from 1 July 2027.

As [The Adviser](https://www.theadviser.com.au/broker/48427-brokers-warned-to-be-prepared-for-onslaught-of-investor-queries) reports, the mortgage and finance broking industry is bracing for a surge in client inquiries as investors scramble to understand what these changes mean for their portfolios and their serviceability.

What's Actually Changing — and When

**Capital gains tax:** From 1 July 2027, the existing 50% CGT discount available to individuals, trusts and partnerships will be replaced with cost-base indexation, combined with a 30% minimum tax on net capital gains. Discretionary trusts will also face a 30% minimum tax rate on taxable income. The one meaningful carve-out: investors in new residential properties can still choose to retain the 50% CGT discount.

**Negative gearing:** For established residential properties acquired after 7:30pm on 12 May 2026 (budget night), negative gearing will only apply against property-related income — not against your salary or wages. If your new investment property makes a rental loss, you can no longer use it to reduce your personal income tax bill. Negative gearing is preserved in full for new construction.

Properties you already owned — or purchased before the budget night cut-off — continue under existing rules.

AMP chief economist Shane Oliver forecast a short-term house price correction of around 5% as investors recalibrate their after-tax return expectations. But he cautioned against reading that as a lasting affordability dividend, noting the federal budget papers themselves estimate the tax changes will reduce housing supply by 35,000 homes over a decade.

What Industry Leaders Are Saying

The response from mortgage and finance industry bodies has been broad and, in some cases, sharply critical.

Mortgage and Finance Association of Australia (MFAA) CEO Anja Pannek said the priority was getting clear, practical information to households and investors quickly. "Brokers will be having practical conversations with clients who are trying to understand what these changes mean for their own circumstances," Pannek said. "Clear guidance, careful implementation and appropriate transitional arrangements will be critical."

Finsure CEO Simon Bednar was direct about what this means for investor clients: "The shift in negative gearing and CGT treatment means brokers should not give tax advice, but they should be encouraging clients to seek advice early and consider how future settings may affect borrowing, refinancing, buying, selling or holding decisions." He flagged that brokers with knowledge of construction lending, progress payments, and new-build policy would be "better placed to capture demand" as investors pivot away from established properties.

Sam White, CEO of Loan Market, echoed the new-build angle. "Investors could favour new builds, while owner-occupiers could favour existing property," he said, adding that ongoing construction cost pressures and a shortage of skilled workers would limit the number of new developments coming to market.

Mark Haron, executive director at Connective, offered a clearer view for first home buyers: "For first home buyers, it means they could face less competition from investors in established properties. For investors, we're likely to see more focus move towards new builds, where incentives still apply."

The Commercial and Asset Finance Brokers Association (CAFBA) CEO David Bushby warned that the new rules were extremely complex and that transitional valuation requirements would likely create unintended consequences — and possibly encourage avoidance behaviour in the market. Blake Buchanan of Specialist Finance Group (SFG) was equally pointed: "A significant portion of so-called 'mum and dad' investors are not wealthy property moguls. Many are everyday Australians attempting to enter the property market in whatever way they can."

Practical Steps Depending on Where You Sit

**You already own investment properties.** Your existing portfolio is largely protected. Properties bought before budget night retain full negative gearing against salary income, and the 50% CGT discount applies under the rules in force when you purchased. The priority now is reviewing your cash flow position for any future acquisitions under the new settings, particularly if interest rates remain elevated.

**You're planning to buy an investment property.** The cut-off for old-style negative gearing on established properties was 7:30pm on 12 May 2026. From that point forward, any established property you purchase won't allow you to offset rental losses against wage income. Review your [borrowing power](/calculators/borrowing-power) carefully — the numbers look different when you can no longer claim rental losses against your salary.

**New builds now carry a meaningful tax advantage.** Investors choosing new construction retain both full negative gearing and the option to use the 50% CGT discount. If that path interests you, explore [home loan options for investors](/home-loans/investor) and understand the implications of construction financing, including progress draw-downs and valuation risk.

**Owner-occupiers may benefit indirectly.** Softer investor demand in the established property market could mean less competition at auction. If you've been sitting on the sidelines, this may be a good time to [compare home loan rates](/home-loans/cheapest) and see what you qualify for today.

**If you're refinancing an existing investment loan.** Rising rates and changed tax settings together may mean your current deal no longer stacks up. A review of your [refinancing options](/home-loans/refinance) could reduce your holding costs while the new rules are phased in.

The changes don't take effect until 1 July 2027 — but decisions made now, on what to buy, how to structure ownership, and how to finance it, will be made in the shadow of the new rules. Get informed, seek appropriate tax advice, and act deliberately rather than reactively.