The 60-second version. The Albanese government's 2026 Federal Budget introduced three material tax changes for property investors. All three take effect 1 July 2027, with a lookback rule for any purchases after 7:30pm AEST on 12 May 2026. If you are considering another established residential acquisition, the modelling window closes on 30 June 2027. New builds have separate rules.
Rule 1. Negative gearing limits on established residential
Under current rules, an investor with a rental loss of, say, $18,000 in a year can deduct that loss against their salary income and receive a tax refund proportional to their marginal rate. For a $180k earner, that is roughly $6,660 back. This is the mechanism that has made negative gearing a household term in Australia for four decades.
From 1 July 2027, this stops for established residential property acquired after 7:30pm AEST, 12 May 2026. Losses can only be offset against other property or investment income, not salary. Any unused loss carries forward indefinitely against future property gains.
What actually changes
| Acquisition date | Rule that applies |
|---|---|
| Before 12 May 2026 7:30pm | Legacy rules. Losses deductible against salary indefinitely. No change. |
| Between 12 May 2026 and 30 June 2027 | Legacy rules apply until 30 June 2027. From 1 July 2027 onward, new rules kick in for this property. |
| 1 July 2027 onward | New rules from day one. Losses quarantined to property/investment income only. |
New build exemption. Properties classified as "new build" retain full negative gearing indefinitely. Definition matters: vacant land with new dwelling, OR demolition and greater dwelling count. Knock-down-rebuild same-count does NOT qualify. Substantial renovations do NOT qualify. This is the crucial carve-out. If you are targeting new-build stock in the acquisition window, negative gearing survives even post-1 July 2027.
Rule 2. CGT discount replaced with cost-base indexation + 30% minimum
Today, if you hold a property more than 12 months and sell at a profit, only 50% of the gain is taxable. It is the single biggest tax break in Australian property.
From 1 July 2027, this changes. The 50% discount is replaced with two things:
- Cost-base indexation. Your original purchase price is adjusted upward for CPI. Only the gain above CPI-adjusted cost is taxable.
- Minimum 30% inclusion. Whatever the CPI adjustment shows, at least 30% of the raw gain is taxable. Prevents zero-tax outcomes in high-inflation scenarios.
Split-treatment for pre-1 July 2027 holdings
If you already own a property, you get split treatment on any future sale:
- The portion of your gain accrued up to 30 June 2027 remains under the old 50% discount rule.
- The portion accrued from 1 July 2027 onward uses the new indexation + 30% minimum method.
Practically, this means you need a professional valuation dated 30 June 2027 to establish the split point. If you sell later without one, the ATO will apply a straight-line time apportionment which is usually less favourable.
New build election. Owners of qualifying new-build stock can elect to apply the 50% discount to the entire gain, even for the post-1 July 2027 portion. Another carve-out that favours new dwellings over established stock.
Rule 3. 30% minimum tax on discretionary trust distributions
This one lands on 1 July 2028. Any distribution from a discretionary (family) trust to a beneficiary is subject to a minimum 30% tax rate, regardless of the beneficiary's actual marginal rate.
Historically, investors have used family trusts to "spray" distributions to lower-taxed beneficiaries. A parent on 47% marginal rate could distribute to an adult child on 19%, capturing the differential. Post-1 July 2028, that structural advantage narrows dramatically.
The reform doesn't ban trusts. It removes the tax arbitrage. Trusts remain valuable for asset protection, estate planning, and structural flexibility. But the "tax minimisation via distribution" playbook of the last 30 years has closed.
Rollover relief window
Between 1 July 2027 and 30 June 2030, trustees can restructure discretionary trusts into different vehicles (companies, unit trusts, individual ownership) without triggering CGT. This is a 3-year window with a hard end date.
Watch the stamp duty caveat. The CGT rollover does NOT waive state stamp duty on land transfers. For land-rich trusts, restructuring can trigger multi-hundred-thousand-dollar stamp duty bills even with CGT relief. Speak to a lawyer + accountant BEFORE moving. The three-state review (NSW, VIC, QLD) matters differently in each.
How to think about it as an investor
Three questions, in order:
- Am I planning to acquire more established residential in the next 12 months? If yes, the modelling window closes 30 June 2027. Every property acquired before that date locks in legacy negative gearing indefinitely, even after 1 July 2027 kicks in for post-acquisitions. The 15-month buffer is real.
- Am I holding property I intend to sell in the next 10 years? Get a 30 June 2027 valuation. It costs $500-800. It could save you tens of thousands in CGT.
- Do I have a discretionary trust? Book time with your accountant now, not in 2028. The rollover window opens in 12 months.
What we baked into the tracker
StratMap models all three reforms end-to-end. Every strategy property carries a taxRegime field that auto-classifies from purchase date. The engine branches on:
- Negative gearing quarantining (post-cutoff established residential)
- Cost-base indexation via hardcoded quarterly CPI series (built for 2026-2035 projection)
- Split-CGT calculation with 30 June 2027 pivot date
- New-build election flag on qualifying properties
- Trust distribution modelling with 30% minimum inclusion
You can toggle assumptions if the legislation moves through parliament with amendments (likely). The framework holds.
The compliance frame. This article is educational. StratMap models the numbers. Your accountant advises on tax. Your lawyer advises on structures. Your broker advises on lending. Nothing in this article, or in the tracker, is personal financial advice. Australian residential property is not a financial product under the Corporations Act 2001 and StratMap does not hold an AFSL.