Federal Budget 2026-27 Recap - What This Means For You
The 2026–27 Australian Federal Budget has landed at a time when rising inflation, affordability pressures and constrained housing supply continue to dominate the national conversation. We’ve unpacked the key announcements to help you understand what these changes could mean for the Australian property market.
This year’s Budget places a strong focus on housing supply, including a $2 billion infrastructure commitment and measures aimed at accelerating planning approvals and new housing delivery.
Importantly, it also introduces significant changes to negative gearing and capital gains tax settings, designed to encourage investment into new housing stock rather than established dwellings. Read the full recap below for a deeper look at the key announcements.
Negative Gearing
Despite predictions the budget would come after baby boomers, they have been largely spared the pain with generous grandfathering ensuring that existing investors and gen Xers who already negatively gear can hang onto their tax concessions.
So, if you own an existing rental property right now you can keep negatively gearing. Negative gearing will be preserved in the future for new builds only.
What if you are buying an investment property right now?
Even if you have a contract that has been entered into, but not yet settled, you will be allowed to negatively gear it in future years.
Properties purchased between budget night and 30 June 2027 may be negatively geared during this period, but not from July 1, 2027. Properties purchased from July 1, 2027 will not be able to be negatively geared if they are existing housing stock.
Capital Gains Tax
From 1 July 2027, the Government will replace the 50 per cent CGT discount for individuals, trusts and partnerships with cost base indexation and a 30 per cent minimum tax rate on capital gains. The current 50 per cent CGT discount was introduced in 1999, allowing taxpayers to reduce their taxable capital gain by half rather than adjusting for inflation, if they owned the asset for more than 12 months.
The budget argues that returning to indexation based on the Consumer Price Index (CPI) aligns with the original intent of the CGT regime and supports productivity over time by ensuring that investment decisions are taken for economic reasons, not due to tax outcomes.
Indexation will be calculated using CPI in a similar manner to arrangements previously in place between 1985 and 1999. The changes will apply to all CGT assets (including property and shares) held by individuals, partnerships and trusts for at least 12 months.
A minimum tax rate of 30 per cent will apply to real capital gains accruing from 1 July 2027. There is no tax impact until the income is realised, in other words until the property or shares are sold. This will not affect people whose capital gains are already taxed at rates of at least 30 per cent.
CGT Transitional Arrangements
For eligible CGT assets other than new residential properties there will be no changes in arrangements for assets purchased and sold prior to 1 July 2027. Assets purchased after 1 July 2027 will be treated wholly under the new arrangements.
Assets owned prior to 1 July 2027 and sold after 1 July 2027 will be treated under current arrangements on gains made prior to this date, and under the new arrangements for gains made after this date. You don’t need to pay any tax until you have sold the asset or investment property. CGT doesn’t apply to the family home.
Exemptions
Recipients of means-tested income support payments, such as the Age Pension or JobSeeker, will be exempted from the minimum tax if they receive any payment in the financial year in which they realise the capital gain.
How assets will be valued? An asset’s value on 1 July 2027 will be determined by taxpayers as part of their tax return in the year the asset is realised.
Taxpayers can either seek a valuation of the asset as of July 1, 2027 which will include using quoted prices for assets such as shares; or use a specified apportionment formula that estimates the asset’s value on July 1, 2027 based on its growth rate over the asset’s holding period. The ATO will provide tools to estimate this value for taxpayers.
CGT New Build Exemptions
Investors who buy new builds will be able to choose either the 50 per cent CGT discount or indexation and the minimum tax when they sell the property. These investors will also continue to have access to negative gearing. This means if they make a rental loss on a new build, they can still use that loss to reduce their taxable income (including salary and wages).
New builds are defined as dwellings constructed on vacant land, or where existing properties are demolished and replaced with a greater number of dwellings. Knock-down rebuilds or substantial renovations that do not increase supply will not be eligible. A new build cannot have been previously sold, unless first owned by the builder and not occupied for more than 12 months.