The media has been loud about the latest changes. Here’s my honest read on what’s shifted, what it means in practice, and why I haven’t changed my view on investing in property.
If you’ve been following the news since Budget night, the coverage has been hard to miss. A lot of investors I’ve spoken to have been sitting on their hands, waiting to see how this all shakes out before they do anything.
I get that. But having worked through these changes with my own clients over the past few weeks, my honest view is that the impact is more marginal than most people are currently understanding.
The Key Changes
There are two big changes driving most of the noise: the reform to negative gearing and the shift in how capital gains tax is calculated. There are also changes to trust structures, which matter more for investors and business owners with more complex setups.
One important thing to flag upfront: none of this is law yet.
These are proposed measures from the 2026-27 Federal Budget, and they still need to pass through Parliament. The fine print is still being worked through, so talk to your accountant before making any decisions based on this.
Negative Gearing
A lot of people have read the headlines and concluded that negative gearing has been removed entirely. It hasn’t.
Under the old rules, if your investment property was generating a loss, say your costs came to $50,000 a year, and your rental income was $40,000, you had a $10,000 loss for that year. As a high-income earner paying 48 cents in the dollar, you could offset that loss against your wages, reduce your taxable income by $10,000 and get around $4,800 back at tax time.
Under the proposed new rules, for established properties purchased after 7:30 pm on 12 May 2026, you can no longer offset that loss against your wage income. But you don’t just lose it either. The loss carries forward and stays with the property. It can offset rental income in future years, and if you sell, it can reduce the taxable capital gain.
You still get the negative gearing. You just get it at the end rather than the start.
What About Properties You Already Own?
If you already owned the property before Budget night, the changes are limited for you. Those properties are grandfathered under the old rules, as are any properties that were already under contract at that point.
If you purchase an established property between now and 30 June 2027, you can still negatively gear during that window, but not from 1 July 2027 onward.
The Part That Does Hurt
Where this change creates real impact is in borrowing capacity.
Lenders are now factoring in the loss of that annual tax refund when they assess investment loan applications. A borrower who could previously service a $1 million loan might now find themselves assessed at $800,000 or less, depending on the income and the property. That is a genuine change, and for many investors, it is the most disruptive part of this budget right now.
For investors buying with cash, the negative gearing changes do not really affect them. This is more a borrowing capacity story than anything else.
What I think we will start to see on established property is rents pushing up slightly, and prices correcting a little. That combination increases the percentage yield, which is what investors are going to need. Investors will need stronger yields, so properties need to work harder from day one.
In the long run, any asset you own, you want it to be generating you money. What’s the point of just owning something that costs you money?
Capital Gains
The capital gains change has generated just as much noise as the negative gearing shift. My view is that it is less significant for most long-term investors, for one simple reason: it only becomes a factor if you sell.
From 1 July 2027, the 50% capital gains tax discount is proposed to be replaced with a cost base indexation model. So instead of halving your taxable gain after holding an asset for 12 months, your purchase price gets adjusted upward for inflation each year. You then pay tax on the gain above that adjusted figure.
To put some numbers to it: if you buy a property for $1 million and sell it five years later for $1.2 million, that $200,000 gain no longer just gets halved to $100,000. Instead, that $1 million cost base gets indexed for inflation each year, and your taxable gain is reduced to the amount above that indexed figure.
It Is Not Just Property
This is worth being clear about: these changes apply to capital gains tax assets more broadly, not just investment properties.
Shares, businesses, everything.
A lot of the media has fixated on property, but business owners with certain structures have been hit just as hard, if not harder, by this budget overall.
There are also transitional arrangements in place. The new rules only apply to gains accruing after 1 July 2027. If you hold an asset bought before that date and sell after it, the pre-1 July 2027 gains are treated under the current rules, and the later gains are treated under the new rules.
For anyone planning a sale in the next few years, now is the time to review where you stand.
Trust Structures
For investors and business owners holding assets through discretionary family trusts, this budget is more consequential than the negative gearing and capital gains changes alone suggest.
From 1 July 2028, the Government is proposing a 30% minimum tax on discretionary trusts. A lot of business owners have been structuring things through trusts and are now concerned about how that affects them. That is a real concern.
What I am seeing is a shift in thinking toward self-managed super funds and company structures as alternatives. That depends entirely on your situation and what your accountant tells you. I am not here to give tax advice.
But if you have been holding assets through a trust and have not reviewed that structure since Budget night, the conversation is worth having now.
Who This Really Hurts
Here is the part I feel most strongly about.
The people the government says they are trying to help, renters and first home buyers, are the ones most likely to feel the pain. It always seems to come back to hurting the people who are renting and the people trying to get into the market. These changes do not actually do much for those people.
When investors can no longer absorb a cashflow loss with a year-end tax refund, they need stronger yields to make the numbers work. That means rents push up, prices soften, or some combination of both. For someone trying to save a deposit while paying rent, none of those outcomes helps.
I also think the argument that investors have been driving prices out of reach for first-home buyers through negative gearing is overstated. Every investor I know is trying to pay as little for the property as possible. It is typically the emotional owner-occupier who really wants a home and is prepared to stretch beyond what the fundamentals justify. That is what drives prices.
I think the idea behind this budget is in the right place, but the execution is not quite there.
What I Think Investors Should Do
My position on property has not changed.
If you are buying in areas with genuine scarcity, strong rental demand, good transport links and low vacancy rates, those properties will continue to grow in value. The fundamentals of good property investment do not change because of the tax settings around it.
You should not be investing for tax incentives anyway. The numbers and the fundamentals still need to make sense on their own. Any tax benefit is just a cherry on top. They have changed the rules of the game a little bit, that’s all.
So yes, the changes hurt in the short term, but in the long run, you still want to be making money and paying tax on your gains. What is the alternative?
If your borrowing capacity has been affected, it is worth having a proper conversation about what that means for your strategy before you write off your plans entirely. And if you are holding assets in a trust structure, talk to your accountant sooner rather than later.
If you are unsure how these changes affect your buying strategy or want to talk through what the options look like for your situation, feel free to reach out.
Important note: This article contains general commentary only and does not constitute financial, tax, or legal advice. The changes discussed are proposed measures and are not yet law. Please consult a qualified financial adviser or tax professional before making any decisions based on the above.
