Tax Planning
Maximising Tax Efficiency Under Australia’s 2026 CGT and Negative Gearing Overhaul
The Budget 2026-27 introduced sweeping reforms to capital gains tax and negative gearing—transforming how investors will be taxed from mid-2027. Here's how you can adjust your investment and real estate strategy today to retain tax advantages.
By NomadicTax Research Team • 6 min read • May 28, 2026
## Understanding the New Landscape
From **1 July 2027**, Australia will implement major changes to the Capital Gains Tax (CGT) discount and negative gearing rules as part of the 2026-27 Federal Budget:
- The 50% CGT discount will be replaced with **cost base indexation** (i.e. accounting for inflation) alongside a **30% minimum tax** on realised gains. ([budget.gov.au](https://budget.gov.au/content/04-tax-reform.htm?utm_source=openai))
- Negative gearing on residential property will be **limited to new builds only**; existing property investments held before Budget night (which was at **7:30 pm AEST on 12 May 2026**) are grandfathered and won’t face this restriction. ([budget.gov.au](https://budget.gov.au/content/04-tax-reform.htm?utm_source=openai))
- Discretionary trusts will face a **minimum 30% tax** from 1 July 2028, with rollover relief available from 1 July 2027 for those who need to restructure. ([budget.gov.au](https://budget.gov.au/content/04-tax-reform.htm?utm_source=openai))
## Why These Reforms Matter
These changes aim to address:
- **Housing affordability** — cooling investor demand in existing housing. ([budget.gov.au](https://budget.gov.au/content/overview/download/budget-overview-2026-27.pdf?utm_source=openai))
- **Fairness across income types**, so capital gains aren’t taxed more leniently than labour income. ([budget.gov.au](https://budget.gov.au/content/04-tax-reform.htm?utm_source=openai))
- **Incentivising investment in new housing supply** and discouraging speculative investment in established property. ([budget.gov.au](https://budget.gov.au/content/04-tax-reform.htm?utm_source=openai))
## Practical Steps You Can Take Now
| Action | Explanation & Example |
|---|---|
| **Review your portfolio before 1 July 2027** | If holding assets likely to generate significant gains (shares, property, collectibles), selling before the reforms may preserve the 50% CGT discount. E.g. Selling an investment property currently held may lock in full discount. |
| **Consider shifting investment strategy to new builds** | New residential properties will still allow negative gearing across all income and may qualify for the old CGT discount vs choosing the new regime. This could be useful for property investors considering expansion. |
| **Evaluate trust structures** | Trustee-beneficiary arrangements and discretionary trusts will incur higher minimum tax from mid-2028. Those relying heavily on trusts may need to shift to companies or fixed trusts during the rollout period (1 July 2027 onward). |
| **Plan for tax year 2026-27 carefully** | With grandfathering based on Budget night, any property purchases after 7:30pm AEST on 12 May 2026 lose earlier protections. Timing is critical. |
## Example Scenario
**Sarah**, an individual investor, owns shares purchased in 2015 and an investment property bought in 2019. If she:
- **sells shares in 2026-27**, the gains are taxed under the old 50% CGT discount, since gains accrue prior to 1 July 2027. If she holds beyond, only gains made after that date are subject to the new indexing policy. ([budget.gov.au](https://budget.gov.au/content/04-tax-reform.htm?utm_source=openai))
- **buys another investment property (new build)** after Budget night, she will still be able to negative gear and choose between CGT discount or new regime. If instead she buys established property after Budget, negative gearing against wage income is disallowed after 1 July 2027. |
## Risks & Considerations
- Changes may limit deductions and increase tax exposure for investors who do not act by the deadlines.
- Restructuring trust arrangements has legal, compliance and cost implications—seek professional advice.
- Some reforms are **enacted; others still proposed or require legislation**—cliff risks remain. |