The 2026 budget: what changed for property
The Treasurer handed down the 2026-27 budget on Tuesday night. Three things to know if you own property, plan to own, or are saving for your first home.
Capital gains tax: the 50% discount is gone from 1 July 2027. No grandfathering. This affects every sale after that date.
Negative gearing: from 1 July 2027 only new builds qualify. Anything you owned at 7.30pm on 12 May 2026 is grandfathered, so existing investors are untouched.
Other property measures: the 5% deposit scheme for first home buyers stays, the ban on foreign buyers of established homes is extended, plus a $2 billion infrastructure fund, tighter build-to-rent rules, and another round of social housing funding.
Capital gains tax: this one affects everyone
The 50% CGT discount is replaced with cost base indexation and a flat 30% tax rate. There is no exemption for property you already own. If you sell after 1 July 2027, the new rules apply, regardless of when you bought.
Whether you pay more or less under the new system depends on how fast your asset grew compared to inflation.
Take this property example.
You buy an investment in 2028 for $800,000 and sell in 2038 for $1,300,000. Gross gain of $500,000 on paper.
Under the new rules your cost base is indexed for inflation before the gain is calculated. Assume CPI runs at 3% per year over those 10 years. Your $800,000 cost base lifts to roughly $1,075,000. Your real taxable gain drops to around $225,000, taxed at the flat 30% rate. Tax bill: roughly $67,500.
Under the old 50% discount at a 37% marginal rate it would have been around $92,500. Modest growth, you win.
Flip the same property to $1,600,000 at sale and your bill is $157,500 versus $111,000 under the old rules. Strong growth, you lose.
The same logic catches startup equity. Options with a $10,000 cost base, sold two years later for $110,000. The old rules taxed you $18,500. The new rules tax you about $26,700. Short hold, strong growth, you pay more.
This is the one to plan around. Every sale after 1 July 2027 is in scope.
Negative gearing: existing investors are not affected
If you owned an investment property at 7.30pm on 12 May 2026, your rules do not change. Full stop.
For properties bought after 1 July 2027, only new builds qualify for negative gearing. Established stock does not. If you fall outside grandfathering, your losses are not lost. They are quarantined and carried forward.
To clarify this, here’s an ice cream stand analogy.
The stand costs $47,000 a year to run and only makes $28,000 in revenue, so it runs at a $19,000 loss for the year. Under the old rules that $19,000 came straight off your salary at tax time. Under the new rules it cannot touch your salary anymore. But it does not disappear. It goes into a drawer.
Next year the stand turns $6,000 in profit. You open the drawer, pull out $6,000 of last year's loss, and wipe the profit to zero. No tax. Whatever is left in the drawer at sale comes straight off your capital gains bill, dollar for dollar.
No expiry. No time limit.
The same logic applies to maintenance spend.
You buy an investment property in September 2026. In year one the roof needs replacing and the hot water system dies. You spend $22,000 on repairs and maintenance on top of your interest and holding costs. Under the old rules that $22,000 came off your salary at tax time. Under the new rules every dollar of it lands in your carried forward loss bank. Three years later when the property turns cash flow positive, those losses start wiping out your rental profits (which you’d have to pay tax on). Whatever is left in the bank at sale comes off your capital gains bill.
The deduction still exists. You just wait longer to use it.
The rest of the budget
Beyond the two big tax reforms, the budget includes a handful of measures worth flagging:
5% deposit scheme for first home buyers stays in place. No LMI for eligible buyers.
Ban on foreign investors purchasing established homes is extended.
New $2 billion Local Infrastructure Fund to deliver roads, power and drainage for new estates.
Build-to-rent tax concessions tightened. Developers now need to offer 10% affordable tenancies and 5-year leases for tenants to qualify.
Housing Australia Future Fund Round 3 opens, targeting another 21,350 social and affordable homes.
Total federal housing investment is now sitting at a record $47 billion.
What it means for borrowing
Most of these changes do not move serviceability today. Cash rate decisions sit with the RBA, not Treasury, and your borrowing capacity will keep moving with interest rates and lender policy rather than budget headlines.
One segment shift worth tracking is if investor demand softens for established homes from 2027 onwards, prices in that segment may flatten compared to new builds. Over time that can change the loan-to-value position on a property you already own.
Summary of what you need to know
CGT changes hit every sale after 1 July 2027 with no exemption. Negative gearing changes leave existing investors alone but reshape the maths for anyone buying after that date.
Speak to your accountant before any sale decision after July 2027, and reach out if you want to know how the changes affect your specific borrowing position.