Tax Planning
Navigating Negative Gearing & CGT Reform: Practical Steps for Property Investors
Meltdown in property tax rules—negative gearing, CGT discount, and its impact on established vs new builds from mid-2026 to 2027.
By NomadicTax Research Team • 5-8 min read • May 31, 2026
## 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](https://www.pm.gov.au/media/tax-reform-workers-businesses-and-future-generations?utm_source=openai)) 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](https://atotaxrates.info/federal-budgets/budget-2026-for-2026-27/?utm_source=openai))
## 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](https://www.pm.gov.au/media/tax-reform-workers-businesses-and-future-generations?utm_source=openai)) |
| 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](https://www.pm.gov.au/media/tax-reform-workers-businesses-and-future-generations?utm_source=openai)) |
| 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](https://atotaxrates.info/federal-budgets/budget-2026-for-2026-27/?utm_source=openai)) |
## 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](https://www.pm.gov.au/media/tax-reform-workers-businesses-and-future-generations?utm_source=openai)) Expanded rollover relief will be available from 1 July 2027 to help move out of discretionary trusts without immediate tax penalty.([minterellison.com](https://www.minterellison.com/articles/australian-federal-budget-2026-27?utm_source=openai))
## 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.