2026 Federal Budget – Property & Tax Changes Explained (Q&A)
1. What’s the big news from the 2026 Budget?
The government has announced major changes to property taxes, especially around:
- Capital Gains Tax (CGT)
- Negative gearing
- Trusts and tax benefits
These changes aim to improve housing affordability and increase new housing supply, but they will also affect property investors.
2. What is changing with negative gearing?
Q: What is negative gearing?
It’s when your property expenses are higher than your rental income, and you use that loss to reduce your taxable income (like your salary).
Q: What are the new rules?
From Budget night (now announced):
- Negative gearing will only apply to NEW properties (new builds)
- Existing properties (already owned before the Budget) are not affected (grandfathered)
Q: What if I buy an existing property now?
- You can still claim losses, but:
- Only against rental income
- Not against your salary or wages
- Any unused losses can be carried forward to future years
Simple takeaway:
- Buy new = full tax benefits remain
- Buy existing = limited tax benefits
3. What is changing with Capital Gains Tax (CGT)?
Q: What is CGT?
CGT is the tax you pay on the profit when you sell an asset (like investment property).
Q: What is the current rule?
- If you hold a property for over 12 months:
You get a 50% discount on the gain
Q: What is changing?
From 1 July 2027:
- The 50% discount will be removed
- It will be replaced with inflation-based adjustments
- A minimum 30% tax will apply on gains
Q: Are new builds treated differently?
Yes:
- Investors in new properties can still choose the 50% discount
- This is to encourage construction and housing supply
Simple takeaway:
- Future investment gains may be taxed more
- New builds remain more tax-effective
4. Are there changes to family trusts?
Q: What is changing with trusts?
From 1 July 2028:
- A minimum 30% tax rate will apply to discretionary trusts
- Some exceptions may apply
Q: Why is this happening?
To stop high-income earners from:
- Splitting income to reduce tax
Simple takeaway:
- Less flexibility to minimise tax using trusts
5. Are there any new tax benefits?
Q: What tax relief is being introduced?
Instant $1,000 deduction
- No receipts required
- Easier tax returns for many workers
Lower tax rates
- Income between $18,201–$45,000:
- Reduced to 15% from July 2026
- Reduced further to 14% from July 2027
Extra savings
- Around:
- $268 per year (from 2026–27)
- $536 per year (from 2027–28)
New tax offset
- From 2027–28, a $250 annual tax offset
Simple takeaway:
- Most workers will pay slightly less tax
6. Why is the government making these changes?
The goal is to:
- Encourage building new homes
- Improve housing affordability
- Make the tax system fairer between workers and investors
7. What are the concerns?
Some experts believe:
- Investors may leave the market
- Rental supply could decrease
- Rents could increase (possibly up to 30%)
8. What does this mean for you?
If you are:
An existing property investor
- You are mostly protected (no change to current holdings)
Looking to invest
- New builds will be more attractive
- Existing properties will have reduced tax benefits
A first home buyer
- Less competition from investors may help
An everyday taxpayer
- You’ll benefit from tax cuts and simpler deductions
Final Summary
- New builds are strongly encouraged
- Tax benefits for existing property investments are reduced
- CGT changes may increase tax on future profits
- Most workers get modest tax relief