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) 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) |
| 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) |
| 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) |
| 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) |
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)
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)