Tax Planning
Preparing for CGT & Negative Gearing Reforms: What Property Investors Should Know
The 2026-27 Budget proposes changes to Capital Gains Tax and negative gearing. While they’re not yet law, early planning can protect your position and cash flow.
By NomadicTax Research Team • 5-8 min read • September 8, 2026
## Proposed Changes in the 2026-27 Budget
As of the August 2026 budget, the Government has proposed reforms targeting **CGT (Capital Gains Tax)** and **negative gearing**, including:
- Altering the **CGT discount method**: Gains accrued up to a valuation date (likely **1 July 2027**) may retain the 50% discount for existing assets, while future gains may be taxed under a different regime. ([community.ato.gov.au](https://community.ato.gov.au/s/question/a0JMo000004yYHR/p00419326?utm_source=openai))
- Introducing changes to negative gearing rules, potentially tightening what expenses can be offset and adjusting eligibility for property investors. These changes are **not yet law**. ([community.ato.gov.au](https://community.ato.gov.au/s/?nocache=https%3A%2F%2Fcommunity.ato.gov.au%2Fs%2F&utm_source=openai))
## How These Changes Could Impact You
- If you hold property, the way you calculate gains on sale could shift significantly. Existing gains may be grandfathered but new growth taxed differently.
- Negative gearing deductions may be restricted or phased out, affecting investor cash flows—especially for highly leveraged investors.
- Financing costs, depreciation, repairs and maintenance deductions may be recalibrated under the proposed rules, reducing tax benefits for some.
## What Can Property Investors Do Now
- Obtain **valuation documentation** as of the likely cutoff (e.g. mid-2027) to establish baseline for CGT competition. Even with uncertainties, valuations will matter.
- Review debt levels: investors with high leverage should assess whether future reduced benefits still justify current gearing.
- Keep detailed records of deductions and expenses: any changes to eligible deductions will require substantiation.
- Consult with tax professionals to simulate scenarios under both current and proposed law—but remember: until legislation passes, current rules apply.
## Practical Example
_Example 1:_ Jane purchased an investment property in 2020. If she sells after 1 July 2027, she may get the 50% CGT discount for gains until that date, but gains after may face a different calculation—without discount or with discount tapering. She should get a valuation close to that date and plan for potential tax impact.
_Example 2:_ Tom heavily negative geared several properties. Under the proposed changes, some interest or depreciation deductions may be reduced. He may consider reducing debt ahead of reforms, or selling underperforming assets if tax savings expected to drop.
## Keep in Mind
- Until reforms are **passed by Parliament** and **receive Royal Assent**, existing CGT and negative gearing laws remain in force. ATO guidance will update as proposals become law. ([community.ato.gov.au](https://community.ato.gov.au/s/?nocache=https%3A%2F%2Fcommunity.ato.gov.au%2Fs%2F&utm_source=openai))
- Early action (valuations, debt planning) offers defensive benefit without binding commitment.
By staying informed and preparing ahead, property investors can manage risk, optimize tax position, and adapt smoothly when reforms take effect.