2026 Federal Budget guide

What the 2026 Federal Budget changed for property investors

Passed Parliament on 25 June 2026

From 1 July 2027, negative gearing for established homes bought after 7:30pm AEST on 12 May 2026 is limited, while new builds and properties already held keep it. For all investors, gains from 1 July 2027 use cost base indexation and a 30% minimum tax instead of the 50% discount. SMSF loans for residential property stopped on 10 August 2026, and a minimum tax on discretionary trusts is proposed from 1 July 2028.

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General information based on Treasury’s published measures. Not tax advice.

When did you buy, or sign the contract?
What type of property?
Who owns it?
Established, bought after budget night

Losses are quarantined from 1 July 2027

  • Until 30 June 2027, rental losses can still offset your other income.
  • From 1 July 2027, losses can only offset residential property income, including capital gains, and excess losses carry forward. They cannot offset wages.
  • Gains from 1 July 2027 use cost base indexation with a 30% minimum tax, instead of the 50% discount.
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Key dates

The timeline, in five dates

  1. Budget nightProperties held before this moment keep negative gearing. Contracts signed before it count as held.
  2. Passed ParliamentThe core changes passed as the Treasury Laws Amendment (Tax Reform No. 1) Act 2026.
  3. SMSF borrowingNew SMSF loans (LRBAs) can only be for business real property, such as commercial premises.
  4. Negative gearing and CGTNegative gearing limits start for established homes bought after budget night. Gains from this date use cost base indexation and a 30% minimum tax.
  5. Discretionary trusts (proposed)A proposed minimum 30% tax rate for discretionary trusts, with some exceptions. Not yet law.
What changed

Three changes, in plain English

01Negative gearing

Limited for established homes bought after budget night

  • Properties held before budget night are exempt from the negative gearing changes.
  • New builds can still be negatively geared, before and after 1 July 2027.
  • Established homes bought after budget night: from 1 July 2027 losses can only offset residential property income, including capital gains, and excess losses carry forward. They cannot offset wages.
02Capital gains tax

Cost base indexation and a 30% minimum tax

  • The 50% discount is replaced with cost base indexation, so tax applies to the real gain after inflation.
  • A 30% minimum tax applies to real gains from 1 July 2027. It does not affect people already taxed at 30% or more.
  • Gains made before 1 July 2027 keep the 50% discount, for every property. New build buyers can choose either method.
03Discretionary trusts

A proposed 30% minimum tax from 1 July 2028

  • Proposed: a minimum tax rate of 30% for discretionary (family) trusts, with some exceptions. This is not yet law.
  • Proposed rollover relief to restructure for three years from 1 July 2027.
  • Speak with your accountant before changing how you hold property.

Sources: Treasury, Budget 2026–27 tax system changes; Treasury consultation on the detailed rules. The core changes are law (Treasury Laws Amendment (Tax Reform No. 1) Act 2026, Royal Assent 26 June 2026). The definition of a new build is in the Tax Reform No. 3 Bill 2026, introduced on 14 October 2026 and not yet passed. How to split gains before and after 1 July 2027 is set out in a draft legislative instrument.

Find your situation

What it means for you

Already own investment property
If you held it before budget night, you keep negative gearing. Gains up to 1 July 2027 keep the 50% discount; gains after that use the new method.
Buying an established property now
You can still buy and earn rent. From 1 July 2027 any rental loss stays inside your property income, so cash flow matters more than ever.
Buying a new build
Negative gearing remains, and you choose your CGT method when you sell. Check the build quality and the price you pay, as with any purchase.
Investing through your SMSF
New SMSF loans are now limited to business real property, such as commercial premises. Residential property has to be paid for outright.
Using a family trust
A 30% minimum tax on discretionary trusts is proposed from 1 July 2028. It is not yet law. Ask your accountant whether your structure still suits you.
Want the full guide as a PDF?Our plain-English 2026 Budget guide for investors.
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FAQ

2026 Budget property questions, answered

Is negative gearing being abolished?

No. Properties held before 7:30pm AEST on 12 May 2026 keep it, and new builds can still be negatively geared. For established homes bought after that, from 1 July 2027 losses can only offset residential property income.

Has the change passed Parliament?

Yes. The core changes passed Parliament on 25 June 2026 and received Royal Assent on 26 June 2026. The definition of a new build is in the Tax Reform No. 3 Bill 2026, introduced on 14 October 2026 and not yet passed. The proposed trust changes are not yet law.

What replaces the 50% capital gains tax discount?

Cost base indexation, so tax applies to the real gain after inflation, plus a 30% minimum tax on real gains. It applies to gains from 1 July 2027 on every property. Gains made before that date keep the 50% discount.

I bought an established property after budget night. Can I still claim losses?

Until 30 June 2027, yes, against your other income. From 1 July 2027 the losses can only offset residential property income, including capital gains, and excess losses carry forward. They cannot be used against wages.

Can my SMSF still borrow to buy property?

Only for business real property, such as commercial premises used in a business. New SMSF loans for residential property have been blocked since 10 August 2026. Existing loans, their refinancing and contracts exchanged before that date continue.

Should I still invest in property?

It depends on your situation. The changes put more weight on cash flow, the price you pay and new build options. A strategy call is the best place to test your own numbers.

General information only, not tax, legal or financial advice. Citadel Agency is a licensed buyers agency (licence 092247L) and does not give tax advice. Speak with a registered tax agent about your situation.