Tax Planning

How Australia’s New CGT Reforms & Negative Gearing Changes Affect Investors Building Wealth

Major changes from 1 July 2027 to Capital Gains Tax discounts and negative gearing will reshape property and investment strategies; understanding these shifts is crucial for planning.

By NomadicTax Research Team • 6 min read • May 21, 2026

## What’s Changing Australian investors are facing significant reforms to **Capital Gains Tax (CGT)** and **negative gearing** starting from **1 July 2027**. The 50% CGT discount will be replaced with an **inflation-adjusted indexation system** for most assets. Negative gearing will be **limited to new builds only** after that date. These reforms are designed to restore taxation on *real gains*, and re-target tax concessions to facilitate new housing supply. ([budget.gov.au](https://budget.gov.au/content/04-tax-reform.htm?utm_source=openai)) ## Who Is Affected & What the Transitional Rules Are * Investors holding *existing assets* (shares, existing property) before **12 May 2026** retain the 50% CGT discount for gains on those assets. ([pm.gov.au](https://www.pm.gov.au/media/tax-reform-workers-businesses-and-future-generations?utm_source=openai)) * For assets acquired after that date, the new discount system applies, or for new residential properties the investor may choose between the old or new system. ([budget.gov.au](https://budget.gov.au/content/04-tax-reform.htm?utm_source=openai)) * Negative gearing deductions against other income like wages will no longer apply for **established residential property** acquired after **12 May 2026**, but remain for **new builds**. Losses on established property can only be carried forward and claimed against future property income. ([budget.gov.au](https://budget.gov.au/content/04-tax-reform.htm?utm_source=openai)) ## What This Means in Practice: Example Imagine you bought an existing apartment in a city in 2028. Under old law the profit on sale after holding it long term would receive a 50% discount. Under new law you’ll index the cost-base for inflation, then pay tax on the remaining gain (with a floor of **30%**). Meanwhile, any loss on that property could no longer offset wage income. On the other hand, if you buy a *new build* you retain more favourable treatment under certain rules. ([budget.gov.au](https://budget.gov.au/content/04-tax-reform.htm?utm_source=openai)) ## Actionable Insights & Planning Strategies - **Review your current investment portfolio** before 1 July 2027 to understand which assets will keep the old CGT discount and which will be impacted. - **Consider accelerating purchases of new builds** before effective dates if you want to keep old tax advantages or ensure eligibility under transitional rules. - **Track inflation indices relevant to your assets**, especially for new acquisitions to ensure accurate CGT cost base adjustments. - **Evaluate cash flow effects**, since negative gearing changes may reduce immediate deductibility. Structured wealth planning or using trusts might become more complex. - **Seek professional advice**, especially for property investors with mixed holdings of new vs established properties or those restructuring portfolios. ## Implications & Takeaways These changes represent a long-anticipated shift in Australian tax policy aimed at fairness and housing supply. While they limit certain benefits for investors, they also reduce distortion in the market and may support new housing build incentives. For individuals, careful timing of acquisitions, strong record-keeping, and professional planning will be essential to navigate this new environment with confidence.