What’s Changing in 2027 for Property Investors
Australia is set to reform negative gearing and capital gains tax (CGT) from 1 July 2027: many existing benefits will be limited to new builds; the 50% CGT discount will be replaced for most assets, and minimum tax rates will be introduced.(pm.gov.au) Properties held as of 7:30pm AEST 12 May 2026 are grandfathered until sold. Established properties will no longer allow rental losses to be deducted against income outside of rental or other residential properties.(atotaxrates.info)
Implications by Scenario
| Situation | Before Reform | After Reform if Asset is Established Property |
|---|---|---|
| Negative gearing losses | Deducted fully against salaries or business income | No longer allowed against non-rental income—carry-forward of excess losses only; but new builds retain full benefit.(pm.gov.au) |
| CGT discount | 50% discount applied after 12+ months’ holding | Replaced by cost-base indexation; minimum 30% tax on real gains for individuals, trusts and partnerships. New builds retain option between old and new regimes.(pm.gov.au) |
| Assets acquired pre-announcement | Grandfathered until sold even after reforms | Benefit preserved until sale date; once sold or new property acquired, new rules apply.(atotaxrates.info) |
Practical Steps to Take Now
- Review investment pipeline: if you were planning to acquire established property, consider switching to new builds to retain negative gearing after reform.
- Lock in contracts: any contracts for established properties signed before 7:30pm AEST 12 May 2026 are grandfathered, even if settlement is later.
- Consider asset disposal timing: holding beyond reform may change tax outcomes; model CGT under old vs new base indexation rules.
- Document improvements and costs carefully: when indexation replaces CGT discount, cost bases matter.
- Seek professional advice if using trusts or partnerships—as reforms affect trust taxation heavily.
Trusts & Minimum Tax Considerations
The Budget also introduces a 30% minimum tax on discretionary trusts from 1 July 2028, excluding primary production income and fixed or testamentary trusts. Families may need to restructure.(pm.gov.au) Expanded rollover relief will be available from 1 July 2027 to help move out of discretionary trusts without immediate tax penalty.(minterellison.com)
Example
Sarah owns an established rental property (bought 2018). She also runs a discretionary trust which owns shares. Under new rules:
- For Sarah’s property: negative gearing losses no longer reduce her salary income; she must track and carry forward losses.
- For her trust: minimum 30% tax applies from 1 July 2028 unless income is from primary production. If Sarah moves asset into a company or fixed trust via allowed rollover relief (from 1 July 2027), she may avoid trust minimum tax.
Summary
These reforms reshape the investment property landscape. New builds are privileged; CGT reform means real gains taxed more aggressively. Planning now—structural, timing, and entity choices—can preserve value before changes impose tougher rules.