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)
- 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)
- 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)
- Properties held before 7:30 pm AEST on 12 May 2026 are exempt from the negative gearing change. (treasury.gov.au)
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
- Review property portfolios: Identify existing investment properties vs. potential new builds. Determine whether existing holdings get grandfathered for negative gearing.
- 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.
- Evaluate structure: Whether holding via trust, company or individually, check how these reforms interact with minimum trust tax rules.
- 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)
- 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.}