What’s Changing from July 2027
- Negative gearing restrictions: Only new builds qualify; losses from established residential property may only be deductible against rental income or residential capital gains, and any excess losses must be carried forward.(atotaxrates.info)
- Capital gains tax (CGT) reform: The long-standing 50% CGT discount for individuals, trusts, and partnerships will be replaced by cost-base indexation for assets held more than 12 months. Additionally, a 30% minimum tax rate on net capital gains will be introduced.(pwc.com.au)
- Exemption for foreign resident investors: New builds retain discount eligibility; established properties generate drastically different tax profiles for non-residents. Digital nomads with foreign income ties should assess impacts.
Digital Nomad Implications
- If you're earning income abroad, but paying CGT when you sell Australian property or assets, your holding period and when gain accrues matters: pre- and post-1 July 2027 rules will likely be treated separately. Losses before the changes may offset gains afterwards depending on legislation.(community.ato.gov.au)
- Negative gearing of your investment in residential property may no longer give you deductions across general income if the property is not a new build.
Actionable Planning Tips
- If planning to acquire or sell property or assets, time the transaction carefully: earlier than 1 July 2027, if possible, to take full advantage of existing deductions / discounts.
- Maintain records of acquisition dates, holding periods, costs including inflation measures for indexed cost base calculations. These will be essential after CGT changes.
- For digital nomads, staying aware of residency rules in Australia and how they interact with these property and CGT reforms is crucial: your tax liability depends on your status.
Example Scenario
Alex, living part-year in Australia and overseas, owns a residential property bought in 2015 and currently held. If Alex sells in mid 2027:
- Gain accrued until 30 June 2027 may get old 50% discount.
- Any gain post-1 July 2027 computed via indexation, and subject to a minimum 30% rate on net gains. If Alex plans future property acquisition, choosing a new build after 12 May 2026 may preserve more favourable treatment under negative gearing rules.