Tax Planning
How Australia’s Negative Gearing & CGT Reforms Will Reshape Investment Property Strategy
With sweeping changes to negative gearing rules and the CGT discount set to kick in from 1 July 2027, property investors must rethink how they hold assets and structure their portfolios.
By NomadicTax Research Team • 6 min read • June 25, 2026
## Background
The 2026–27 Federal Budget brought major tax reforms affecting residential property investors: negative gearing will be limited to new builds from 2027-28, and the longstanding 50% capital gains tax (CGT) discount will be replaced by **inflation-adjusted indexation** plus a **30% minimum tax** on real capital gains. Assets acquired before **7:30pm AEST on 12 May 2026** will be grandfathered. ([pm.gov.au](https://www.pm.gov.au/media/tax-reform-workers-businesses-and-future-generations?utm_source=openai))
## What is changing
- **Negative gearing**: applicable only to new residential buildings from 1 July 2027. Existing investments up to the cutoff time/date are unaffected permanently. ([pm.gov.au](https://www.pm.gov.au/media/tax-reform-workers-businesses-and-future-generations?utm_source=openai))
- **CGT changes**: the 50% discount ends on 1 July 2027. For future gains, inflation-adjusted cost bases will replace the discount, and gains will be taxed with a minimum tax rate of 30%. Assets held before that date retain the discount on the pre-cutoff portion. ([pm.gov.au](https://www.pm.gov.au/media/tax-reform-workers-businesses-and-future-generations?utm_source=openai))
## Impacts on investors
| Investor Situation | What changes mean | What to do now |
|---------------------|--------------------|------------------|
| You've purchased investment property before cutoff | You can continue under old negative gearing rules; CGT discount applies to pre-cutoff gains | Focus borrowing, depreciation, and timing of improvements; hold long-term vs reinvestment decisions |
| You plan to buy after cutoff | Losses limited except for new-builds; full CGT on gains with minimum 30% real gain tax | Consider investing in new builds; evaluate total after-tax yield; consult structuring options |
## Planning strategies
- Acquire **new residential property** if you want full negative gearing beyond July 2027.
- Time sales so part falls under old CGT rules if you have assets now — granularity matters.
- Use trusts, companies sparingly, because CGT minimum tax and trust-distribution taxes further complicate return.
- Reassess rental loss claims and depreciation schedules — tax benefits will diminish for many.
## Example scenario
Sarah bought a rental property in 2023. She improves it in 2026 and sells in 2028. Because the purchase was before cutoff, gains from 2023-2027 retain CGT discount; post-2027 gains taxed under new indexation + 30% min. Losses from negative gearing from 2024-2026 still deductible; after July 2027, she can only gear on new builds.
## Actionable Insights Before 1 July 2027
- Check ownership dates and cost bases of investment properties.
- Harvest capital gains between now and cutoff date where possible.
- Consider holding cash reserves to cover reduced negative gearing tax breaks.
- Consult tax professionals to model your structure given forthcoming minimum trust taxation and super changes.
These reforms represent one of the most significant shifts in Australia’s property tax regime in decades. Position yourself early, understand the thresholds, and plan both when to hold and when to act.