Tax Planning
How Australia’s New CGT Reforms Change Things for Investors
Australia’s 2026 Budget reforms fundamentally shift how capital gains and negative gearing work—from 2027 resource real gains taxation and limiting negative gearing for established properties. Understand what changed and how to plan ahead.
By NomadicTax Research Team • 5-8 min read • July 9, 2026
## What’s Changing Under the 2026 Budget
From **1 July 2027** the below reforms will apply:
- The 50% Capital Gains Tax (CGT) discount will be replaced by a discount **based on inflation**, meaning that only **real gains** (after inflation) will be taxed. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
- A **minimum 30% tax rate** will apply on real capital gains. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
- Negative gearing on residential property will be limited to **new builds** only; established properties acquired after 12 May 2026 will lose the ability to deduct losses against non-residential income, though excess losses can be carried forward. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
## Why This Matters for Investors
- The old system with a 50% discount allowed gains to far outpace labour income taxation—this reform narrows that gap. ([ministers.treasury.gov.au](https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/speeches/2026-27-budget-speech-parliament-house-canberra?utm_source=openai))
- Anyone holding established properties may be unaffected if acquisition pre-12 May-2026, but property investors with new purchases need to factor in weaker deductibility and higher effective tax rates.
- Real gains indexation means inflation reduces the nominal gain before tax—good news in high-inflation periods. But investors must register and manage cost base and inflation measures properly.
## Planning Strategies Before the Changes Take Effect
1. **Assess your property portfolio**
- If you own established residential property acquired before 12 May 2026, those holdings are **grandfathered** for negative gearing and CGT discount. ([ministers.treasury.gov.au](https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/government-introduces-first-tranche-tax-reform?utm_source=openai))
- For new builds, consider the trade-off between choosing the old CGT discount (while eligible) vs switching to the inflation-adjusted method + minimum tax, depending on holding period.
2. **Time your disposals wisely**
- Real gains accrue from 1 July 2027. Any gains realised before then will still enjoy the old discount. If possible, delay a disposal until after the effective date, or accelerate one if that is beneficial.
3. **Re-evaluate investment in residential property vs other asset classes**
- Since negative gearing is limited to new builds, opportunities may shift toward other investments—commercial property, equities, or income-producing assets where deductions remain robust.
4. **Track inflation and cost bases clearly**
- You will need strong record-keeping to determine cost-base indexation for assets. Be ready to document purchase prices, improvements, and hold duration.
5. **Review offshore and superannuation investments**
- Some asset income and capital gains in trusts, super funds or international investments may see different treatment. Discretionary trust reforms (minimum tax on trusts) also kick in 1 July 2028. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
## Example Scenario
Suppose Sarah bought a new residential property **after** 12 May 2026. She expects to make a capital gain in 2028. Under the new law:
- She cannot negative gear losses against wages and salaries—only against residential property income.
- When she sells, the taxable gain will be adjusted for inflation, then if more than the threshold, taxed at **no less than 30%**, regardless of her marginal rate.
If instead she had bought an established dwelling in 2025, she retains older rules: 50% CGT discount, full negative gearing deductions.
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**Bottom line**: these reforms make investing in real estate more complex and potentially more costly—especially for new builds and later acquisitions. For existing property owners, many benefits are preserved—but new purchases require careful structuring and timing.