Last updated: 12 May 2026
2026-27 Budget · Property investors
Property investors: what the 2026-27 Budget means for your portfolio
The 2026-27 Federal Budget is the largest shake-up of property tax settings since the introduction of the 50% CGT discount in 1999. For investors, three changes matter: negative gearing is being restricted to new builds, the 50% CGT discount is being replaced with cost base indexation plus a 30% minimum tax, and a 30% minimum tax is coming for discretionary trusts. Existing investments are largely grandfathered. New money has a new tax map.
The three changes that matter to investors
Negative gearing → new builds only
1 July 2027Net rental losses from established residential property bought after 7:30pm AEST 12 May 2026 will no longer be deductible against wages. Losses can be carried forward against future residential rental income or capital gains.
CGT discount → indexation + 30% minimum tax
1 July 2027The flat 50% discount is replaced with cost base indexation, so only real (above-inflation) gains are taxed. A 30% minimum effective rate applies to real gains, neutralising the strategy of selling in a low-income year.
Discretionary trusts → 30% minimum tax at trustee level
1 July 2028Net income inside a discretionary trust faces a 30% trustee-level minimum tax. Non-corporate beneficiaries get non-refundable credits, so the floor only bites where distributions would otherwise have been taxed below 30%.
Decision matrix: when did you (or will you) buy?
| Purchase scenario | Negative gearing | CGT on sale |
|---|---|---|
| Existing property held before Budget night | Unchanged while you hold | 50% discount on pre-1 July 2027 gain; indexation + 30% min on post-1 July 2027 gain |
| Established home bought 12 May 2026 – 30 June 2027 | Allowed in 2026-27; quarantined from 1 July 2027 | Indexation + 30% minimum tax on post-1 July 2027 gains |
| Established home bought from 1 July 2027 | Quarantined | Indexation + 30% minimum tax |
| New build bought from 1 July 2027 | Allowed | Choice of 50% discount or indexation + 30% min at sale |
Why the change – and why 'new builds'
Statement 4 documents the case: investor lending has run 80-90% to existing dwellings since 2019, around half of negative gearing tax benefits flow to the top 10% by lifetime income, and almost one in three negatively-geared properties sold in 2022-23 received an effective tax subsidy over the life of the investment. The flat 50% CGT discount over-compensates capital-city detached housing for inflation, and under-compensates units and shares.
Carving out new builds is a deliberate redirection of investor capital. The Government wants leveraged capital to fund supply, not bid up existing stock.
What investors should be modelling now
- Whether to bring forward any planned sales to lock in the 50% discount on existing assets.
- For new acquisitions: existing established (worse tax position post-2027) vs new build (preserved negative gearing, optional 50% discount).
- Whether discretionary-trust-held property still makes sense once the trust minimum tax begins in 2028.
- Whether higher-density units or BTR-aligned investments now look more attractive vs detached houses.
- How the carry-forward of quarantined rental losses affects your annual cash flow planning.
Buying a home alongside your portfolio?
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Related reading
- Negative gearing limited to new builds – full explainer
- CGT discount replaced with indexation and a 30% minimum tax
- Existing landlords: how grandfathering actually works
- What the Budget does to house prices
Frequently asked questions
Are existing properties affected?
No. Properties held at 7:30pm AEST on 12 May 2026 are grandfathered for negative gearing. For CGT, any gain accrued up to 30 June 2027 still attracts the 50% discount – the new rules apply only to gains arising after 1 July 2027.
What happens if I buy a new investment property today?
If you settle before 7:30pm AEST on 12 May 2026, you're grandfathered. If you buy after that, you can still negatively gear during 2026-27, but from 1 July 2027 negative gearing is restricted to new builds. CGT on gains accruing from 1 July 2027 falls under indexation plus the 30% minimum tax.
Should I sell before 1 July 2027?
Selling before 1 July 2027 locks in the 50% CGT discount on the full gain. The trade-off: you pay tax now and lose the ongoing rental cash flow and grandfathered negative gearing. Run the numbers with a tax adviser before acting on tax timing.
Are new builds still worth it?
Probably more than before. Investors who acquire new builds keep access to negative gearing and can choose between the 50% CGT discount and the new indexation-plus-minimum-tax regime when they sell. That dual-system choice is a meaningful concession.
Does the 30% minimum tax apply if I'm on the top tax bracket?
No. If you're already at or above a 30% marginal rate when the gain is realised, the minimum is irrelevant – you'll pay your marginal rate as normal (on the indexed gain). The minimum bites for low-bracket retirees and trust beneficiaries who would otherwise have paid less.
Source: Budget Paper No. 1, Statement 4, Australian Treasury, 12 May 2026. General information only – consult a tax adviser before acting.
Disclaimer: This information is general in nature and does not constitute financial, legal, or tax advice. Calculations are estimates only and may not reflect your exact circumstances. Eligibility criteria and dollar amounts may change without notice. Always verify with the relevant government authority, your mortgage broker, or a licensed financial adviser before making decisions.