Tax Planning
Planning for the 2027 Capital Gains Tax and Negative Gearing Reforms
Major reforms—capital gains tax indexation, minimum tax rates, and limiting negative gearing—are coming from July 2027. Here's how to plan ahead.
By NomadicTax Research Team • 6-8 min read • July 18, 2026
## Overview of Key Reforms Effective 1 July 2027
The Australian government’s tax reform legislation (Treasury Laws Amendment (Tax Reform No. 1) Act 2026) introduces several major changes starting **1 July 2027**:
- The 50% discount on capital gains tax (CGT) will be replaced with an **inflation-adjusted indexation method**, and a **minimum tax rate of 30%** on real capital gains for individuals, trusts, and partnerships. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
- **Negative gearing** on residential property investment will be limited to **new builds only**. Established properties will no longer allow loss deductions against non-residential income. Investments held before **7:30pm AEST on 12 May 2026** are exempt. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
## Why These Reforms Matter
- To counteract **“bracket creep”** and ensure taxation reflects **real economic gain**, not inflation. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
- To drive investment into **new residential property** and support housing supply. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
- To align tax treatment across asset-holders and ordinary income earners—closing perceived loopholes. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
## Planning Strategies Before 1 July 2027
**For Investors**
- **Realise capital gains** before 1 July 2027 where possible under current CGT discount rules, especially for high-value assets or trusts. If anticipating strong gains, crystallizing earlier may lower tax.
- For established property owners: weigh whether holding or selling property before reforms takes effect might avoid limiting deductions.
**For Prospective Property Investors**
- Focus on **new build residential properties** to ensure negative gearing remains available.
- Be aware that deductibility for losses from established buildings will be restricted after the cut-off.
**Trusts and Estate Planning**
- Discretionary trusts will face a **minimum 30% tax rate** on undistributed receipts or certain income sources. Restructure distributions before the law begins if advisable.
- Review trust deeds and distribution plans in light of minimum rates and CGT changes.
## Examples
- **Alice** bought established rental property in 2021: her loss deductions against wages will continue until 1 July 2027; thereafter only deductions against residential property income allowable, losses cannot offset her wage income. So she should estimate the financial impact after 1 July 2027.
- **Ben**, a trust holder expecting a large CGT event in 2028, may consider selling in June 2027 to benefit from the old 50% discount—which currently applies to realised gains on assets acquired before the reforms.
## Action Plan for Individuals and Advisors
- Conduct **asset reviews**: list all residential properties and when acquired; documents that support property type (new vs. established builds).
- Evaluate **distribution strategies** in trusts to avoid heavy tax burdens post-reform.
- Assess whether to trigger working capital or capital gains events before reform date, balancing market timing, sales costs, and exposure.
- Maintain **detailed records** of purchase dates, costs, and improvements—vital for calculating cost base under indexation.
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This is one of the most significant tax changes in decades. Advance preparation can mean big savings.