Understanding Negative Gearing and CGT Changes for Investors in 2026

What Australian Property Investors Need to Know in 2026

Important: These are currently proposed reforms announced in the 2026 Federal Budget and are not law yet. However, investors should understand how these proposals could affect future property and investment decisions.

1. Negative Gearing Changes

• Existing residential properties held before 7:30pm AEST on 12 May 2026 are proposed to be grandfathered.

• Current investors may continue using rental losses against salary and other income.

• Established residential properties purchased after the announcement may lose access to traditional negative gearing from 1 July 2027.

• Losses may instead only offset future property income or capital gains.

• New builds are expected to remain eligible for negative gearing.

• Commercial property and shares are proposed to remain unaffected.

2. CGT (Capital Gains Tax) Changes

• The current 50% CGT discount may be replaced for future gains after 1 July 2027.

• A cost base indexation method linked to inflation may apply instead.

• A proposed 30% minimum tax on capital gains may also apply in certain situations.

• Assets owned before 1 July 2027 are proposed to receive transitional treatment.

• Only gains accrued after 1 July 2027 may fall under the new calculation method.

3. Existing Investments

Existing investors are likely protected for negative gearing, while CGT changes may still apply to future gains after 1 July 2027.

4. Buying Property After the Announcement

If purchasing established residential property after 12 May 2026:

• Traditional negative gearing benefits may eventually disappear from 1 July 2027.

• Carry-forward rental losses may still be available for future offset.

• Investors may need to focus more on rental yield and cash flow rather than tax benefits alone.

• New builds may become significantly more attractive under the proposed rules.

5. Key Investor Takeaways

Investor Situation	Possible Impact
Existing property owners	Negative gearing likely protected. CGT transitional rules may still apply.
New build investors	May retain negative gearing benefits.
Established property buyers after 12/5/2026	Reduced tax benefits possible.
High capital growth assets	Potentially higher CGT outcomes.
Low growth assets	May benefit from inflation indexation.

Every investor situation is different.

Speak with your trusted accountant/tax practitioner about your unique situation.

Disclaimer: This guide is general information only and should not be treated as tax, legal or financial advice. The reforms discussed are proposals announced in the 2026 Federal Budget and may change before legislation is passed.