Tax Planning
What Property Investors Need to Know: Negative Gearing & CGT Reforms Coming in 2027
Big changes on the horizon for property investors: negative gearing restrictions and capital gains tax discounts are being reformed to focus support on new housing supply.
By NomadicTax Research Team • 7-8 min read • July 7, 2026
## What Reforms Were Announced in the 2026 Budget
Several measures aimed at investor tax settings will take effect from **1 July 2027**: ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
- **Negative gearing** for residential property will be limited to **new builds**. If you own an existing (established) property, deductions for losses versus other income will be restricted. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
- **Capital Gains Tax (CGT) discount of 50%** will be replaced with a **new discount based on inflation**, with a minimum tax rate of **30% on real gains**. Investors will have choice: use the old or new regime for **new builds**. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
## Who’s Exempt or Protected
- Properties held **before announcement time** (7:30pm AEST, **12 May 2026**) are exempt; existing owners or contracts already entered into won’t be affected. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
- New builds under CGT rules get flexibility: option to choose between existing discount or new inflation-adjusted regime. ([treasury.gov.au](https://treasury.gov.au/policy-topics/taxation/budget2026-27?utm_source=openai))
## Examples
- **Carla** bought an established investment property in 2024. From 1 July 2027, any losses she can claim against her wage income will be limited—negative gearing only available for her property’s capital costs but not against other income.
- **David**, planning to build a new duplex, can take advantage of negative gearing for that build since it qualifies as a new build, even after the effective date. Carpeting depreciation and ongoing expenses can still feed into deductions.
## Planning Tips Before the Reforms
- If you currently invest in established properties, evaluate the timeline: whether entering new contracts or purchases before **12 May 2026** could offer protection.
- Consider shifting toward **new builds or development projects** if you want to preserve negative gearing deductibility later.
- Assess whether holding periods align with the CGT reform timing so you can choose structure and build timing to maximise discount options.
## Key Takeaways
- Reforms take effect **1 July 2027**, so there’s time to reorganise investment strategy.
- The shifts aim to **funnel tax incentives toward new housing supply**, reshape investor behavior, and improve fairness.
- For existing property investors, these changes may adjust expected returns—run the numbers early and get financial advice if needed.