Tax Planning
How the 2026-27 Budget Reshapes Capital Gains Tax and Negative Gearing
Major reforms from 1 July 2027 will replace the 50% CGT discount with inflation indexing and introduce a 30% minimum tax on real gains—plus big changes to negative gearing rules.
By NomadicTax Research Team • 5-8 min read • June 2, 2026
## Overview of the CGT and Housing Reform
The 2026–27 Australian Federal Budget brings sweeping changes to the **Capital Gains Tax (CGT)** regime and negative gearing, aiming to improve fairness and reduce tax avoidance. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai)) Here’s what you need to know:
## Key Changes from 1 July 2027 for Investors
| Change | What’s New | Who It Affects |
|---|---|---|
| **CGT Discount Replacement** | 50% CGT discount removed. Instead, cost base indexation applies to assets held at least 12 months. | Individuals, trusts, partnerships. Applies also to pre-1985 assets for gains after 1 July 2027. ([pwc.com.au](https://www.pwc.com.au/tax/tax-alerts/cgt-and-housing-tax-reform.html?utm_source=openai)) |
| **30% Minimum Tax on Real Capital Gains** | If your marginal tax rate is below 30% for the gain portion accrued from 1 July 2027, an additional “minimum tax” will ensure at least 30% effective rate on that gain. | Investors whose combined income plus real gains would otherwise incur less than 30% tax on the gain portion. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai)) |
| **Negative Gearing Restrictions** | From 1 July 2027, negative gearing will be limited to **new builds** (properties adding to new housing supply). Existing properties held by that date are grandfathered until sold. | Rental property investors. Losses from established properties cannot offset other income but can be carried forward. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai)) |
| **Choice for New Builds** | Buyers of new builds can choose between the old 50% discount or the new indexation + minimum tax regime. | Investors in new residential builds acquired after Budget announcement. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai)) |
## Practical Examples
- **Anna**, wage-earner with marginal rate of 19%, buys shares. Under the current 50% discount, her real gain taxed at about 19% on half the gain. Under new rules, her gain after inflation indexed could attract the 30% minimum if her marginal rate is too low.
- **Ben**, investor in property built after Budget night (12 May 2026), when selling after 1 July 2027, can choose the old 50% discount (if eligible) or the new rules.
## What to Do Before Reforms Kick In
- Consider timing of asset sales. Selling before 1 July 2027 might allow use of old rules.
- Review property holdings: established vs new builds.
- Get estimated tax impact with new minimum / indexation regime on your portfolio.
- Work with tax agent to understand exemptions (small business CGT concessions remain untouched) and grandfathering. ([budget.gov.au](https://budget.gov.au/content/factsheets/download/tax-explainers-cgt-trusts-impacts.pdf?utm_source=openai))
These reforms are still being legislated. But with the Bills already introduced on 28 May 2026, preparation now can help you avoid surprises. ([pwc.com.au](https://www.pwc.com.au/tax/tax-alerts/cgt-and-housing-tax-reform.html?utm_source=openai))