Tax Planning
How Australia’s 2026 Budget Reforms Change Tax Planning for Property Investors
Key reforms to negative gearing and capital gains tax mean property investors must adjust strategies now—here’s how to adapt before the new laws kick in.
By NomadicTax Research Team • 5-8 min read • June 15, 2026
## Understanding the Changes
Australia’s 2026-27 budget makes significant changes for property investors, especially in terms of **negative gearing** and **capital gains tax (CGT)**. From 1 July 2027, **negative gearing will be limited to new builds**. Existing properties (held before 7:30 pm AEST on 12 May 2026) will be grandfathered—meaning current arrangements remain until those properties are sold. ([budget.gov.au](https://budget.gov.au/content/04-tax-reform.htm?utm_source=openai)) Meanwhile, the 50% CGT discount for individuals, trusts and partnerships is replaced with cost-base indexation and a **minimum 30% tax rate on real gains** from 1 July 2027. ([budget.gov.au](https://budget.gov.au/content/04-tax-reform.htm?utm_source=openai))
## Strategic Planning Before 1 July 2027
To safeguard current opportunities:
- **Lock in your investment arrangements early.** Buy new builds before the deadline if you want to preserve full negative gearing benefits. ([budget.gov.au](https://budget.gov.au/content/04-tax-reform.htm?utm_source=openai))
- **Sell underperforming assets now.** CGT reforms apply to gains accruing **after** the cut-off; gains made before are still taxed under the current 50% discount. ([community.ato.gov.au](https://community.ato.gov.au/s/question/a0JMo0000057pEH/p-00420353?utm_source=openai))
- **Review property structuring.** Discretionary trusts become less appealing with a 30% minimum tax from 1 July 2028. Fixed trusts or direct ownership may be worth considering. ([budget.gov.au](https://budget.gov.au/content/04-tax-reform.htm?utm_source=openai))
## Illustrative Example(s)
| Scenario | Before Reforms | After Reforms (post-1 July 2027) |
|---|---|---|
| Investor owns established home since 2015; sells in 2028 | Eligible for CGT discount on full gain; negative gearing losses offset against other income. | Only portion of gain accrued after 1 July 2027 taxed under new indexation + minimum tax. Negative gearing treats losses differently (deductible only against residential property income). |
| Purchases new build in 2026 | Full negative gearing and CGT discount still apply. | Investor can choose either original 50% discount or new rules for CGT; full negative gearing preserved for the new build. |
## Actionable Advice
- Review investment property contracts/settlements; act quickly before Budget night (12 May 2026 at 7:30 pm AEST) deadlines. ([budget.gov.au](https://budget.gov.au/content/04-tax-reform.htm?utm_source=openai))
- Maintain strong records of acquisition dates, improvement costs, and usage periods. These will be critical for determining what part of a gain falls under old vs new rules.
- Consult with tax advisors to explore trust restructure or ownership changes, especially if heading toward 2028 when trust minimum tax becomes effective.
- Monitor ATO’s guidelines on what qualifies as “new builds” and how cost-base indexation is calculated.
**Bottom line:** These reforms mark a tipping point in property investment planning. Acting ahead of the deadlines can preserve tax benefits; delaying may incur unwanted tax cost surprises.