Compliance
Negative Gearing & CGT Shake-Up: How Property Investors Should Prepare for 2027 Reforms
Legislation changing how capital gains and negative gearing work from mid-2027 demands foresight from property investors to avoid surprises and preserve deductions.
By NomadicTax Research Team • 5-8 min read • June 13, 2026
## What’s Changing from 1 July 2027
- **Negative gearing for residential property** will be restricted to **new builds only**. This means you’ll only be able to deduct losses against other income for newly built residential properties. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
- **Capital Gains Tax (CGT) Discount** will be replaced with an **inflation-based indexation system**, coupled with a **minimum 30% tax rate** on realised gains. Existing assets will have grandfathering options. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
- **Discretionary trusts** will be subject to a **minimum 30% tax rate** from **1 July 2028**, though **rollover relief** will be available for three years starting **1 July 2027**. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
- Properties held **before 7:30 pm AEST on 12 May 2026** are exempt from the negative gearing change. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
## Who Is Affected?
- Property investors who frequently engage in negative gearing—long-standing strategy for rental losses.
- Those holding high-value or long-held assets anticipating major capital gains.
- Advisors and tax agents needing to adjust modelling and advice for clients.
## Practical Steps to Prepare
1. **Review property portfolios**: Identify existing investment properties vs. potential new builds. Determine whether existing holdings get grandfathered for negative gearing.
2. **Timing of asset sales**: If you plan to sell existing investments, consider realisation before 1 July 2027 if the new regime might increase your tax liability.
3. **Evaluate structure**: Whether holding via trust, company or individually, check how these reforms interact with minimum trust tax rules.
4. **Investment in long-term growth assets**: For non-property assets, think about when gains will be realised under the new inflation-adjusted CGT rules.
## Examples
- *Investor A* owns an established house since 2018. After 1 July 2027, **no longer eligible** for negative gearing on that property if it’s not a new build, unless acquisition before 12 May 2026 qualifies for exemption. Losses will not net off wage income if not a new build. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
- *Investor B* sells shares in 2028 which were held since 2024. Under new law CGT discount no longer a flat 50%. The asset’s gain will be indexed for inflation for the period held, and the effective rate won’t drop below 30%. 🙇♂️
## Tips for Investors
- If planning to buy new property, focus on new builds to preserve negative gearing after the cut-off.
- If considering selling, get advice on whether selling now or later yields less total tax under new vs current rules.
- Keep detailed records of purchase dates, costs, holding periods, and improvements to properly calculate CGT under new indexing rules.
- Track legislative developments—“existing investment” and “grandfathering” provisions are nuanced and still subject to regulations.
{These upcoming reforms are among the biggest in decades. Preparation is your edge to avoid shocks.}